NASAA Task Force Finds Illinois-based Insurance Firm Acted as Unlicensed Broker-Dealer and Investment Adviser
WASHINGTON, D.C., April 4, 2012 — The North American Securities Administrators Association (NASAA) today announced that a settlement has been reached between Bankers Life and Casualty Company and state securities regulators concluding an investigation of unlicensed/unregistered brokerage activity by the insurance company.
“This joint investigation is typical of the aggressive, cooperative and coordinated investor protection actions of state securities regulators and demonstrates the ongoing value of states working together to benefit investors nationwide,” said Jack E. Herstein, NASAA President and Assistant Director of the Nebraska Department of Banking & Finance, Bureau of Securities.
The Chicago-based company agreed that it, along with its BLC Financial Services, Inc. (BLCFS) subsidiary, will not engage in the hiring, training or supervision of any registered representatives or investment adviser representatives through March 31, 2015.
“During this ‘quiet period,’ Bankers Life has agreed not to engage in a violative activity and must refrain from all brokerage activity. The firm also has agreed to hire an independent consultant to verify compliance,” Herstein said.
Bankers Life also agreed to withdraw the registration of its brokerage subsidiary with the Securities and Exchange Commission and will terminate its membership with FINRA.
The state investigation determined that in 2005, Bankers Life entered into an agreement with UVEST Financial Inc. under which Bankers Life insurance agents who became licensed as registered representatives and/or investment adviser representatives of UVEST would provide brokerage and investment advisory services out of the insurance firm’s branch offices. In 2010, Bankers Life entered into a similar arrangement with ProEquities, Inc., a broker-dealer based in Birmingham, Alabama.
State investigators determined that Bankers Life engaged in brokerage and investment adviser activity, despite not being registered, by affiliating with licensed brokers or other firms and directing the operations, hiring, training, production selection and sales techniques of those firms.
State securities regulators determined that Bankers Life received approximately $21 million from the two brokerage firms for variable annuity and securities transactions and investment advice between 2005 and 2011.
The settlement calls for Bankers Life to pay $9.9 million to be disbursed among the states where its dual agents were located between 2005 and 2011. The firm also agreed to pay $375,000 to reimburse the states for the cost of the investigation, $260,000 in past licensing and registration fees, and $106,000 to cover the cost of state audits to ensure compliance with the consent order.
Similar settlements were reached with UVEST and ProEquities. UVEST agreed to pay $750,000 and ProEquities agreed to a payment of $435,000 for their role in the relationship with Bankers Life.
“This action resulted from multi-state investigation of Bankers Life led by the Office of Securities of the Maine Department of Professional & Financial Regulation with invaluable assistance from the Bureau of Securities Regulation of the New Hampshire Department of State, the Division of Securities of the Missouri Office of the Secretary of State, and the Vermont Department of Banking, Insurance, Securities & Health Care Administration,” Herstein said. “NASAA applauds their efforts to bring this matter to a swift resolution.”
NASAA is the oldest international organization devoted to investor protection. Its membership consists of the securities administrators in the 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Canada, and Mexico.
For more information:
Bob Webster, Director of Communications