Prudential Annuities Distributors Inc., agreed Tuesday to pay $950,000 to the Financial Industry Regulatory Authority for failing to detect and prevent a scheme perpetrated by a former LPL rep — and now convicted felon — who stole $1.3 million from an 89-year-old customer's variable annuity account.
FINRA found that Prudential Annuities "repeatedly failed" to adequately investigate "red flags" that Travis A. Wetzel, a former registered sales assistant at LPL Financial and since-convicted felon, was transferring money from the customer's Prudential variable annuity account to a third-party bank account in his wife's maiden name.
FINRA previously barred Wetzel in May 2013. Prudential Annuities and LPL reimbursed the customer in 2013.
"Firms must ensure that their supervisory systems and procedures are designed to recognize and follow up on red flags," Brad Bennett, FINRA executive vice president and chief of enforcement, said in a statement. "There were numerous red flags raised over the course of this scheme, and Prudential Annuities Distributors' failure to adequately respond to them allowed an unscrupulous actor to prey on an elderly customer."
Prudential Annuities neither admitted nor denied the charges, but consented to the entry of FINRA's findings.
FINRA found that, from July 2010 until his misappropriation was discovered in September 2012, Wetzel submitted to Prudential Annuities 114 forged annuity withdrawal requests – four to five withdrawals per month for a total of nearly $50,000 – requesting that Prudential Annuities wire funds from the elderly customer's account to a third-party account in the maiden name of Wetzel's wife.
