BROKER’S IMPERSONATION OF HIS CLIENT GONE WRONG
Harold A. Schwartz, a former Broker at Royal Alliance Associates INC allegedly impersonated one of his clients, in two telephone calls with the customer services hotline of an annuity company. Schwartz wound up being “permitted to resign voluntarily” from Advisor Group’s Royal Alliance wealth management firm, according to a Uniform Termination Notice for Securities Industry Registration (Form U5) filed Feb. 22, 2019.
FINRA however sanctioned him a $5,000 and suspended him for 15 days. In his AWC letter, Schwartz agreed to accept those sanctions without admitting or denying the findings. FINRA accepted the letter Nov. 21, 2019.
In July 2018, Schwartz was instructed by the client to lower the periodic withdrawals from an annuity the customer had bought previously, according to the AWC letter. “Thereafter, Schwartz impersonated the customer during two telephone calls with the customer service hotline of the annuity company and was successful in obtaining a reduction of the periodic withdrawals from the customer’s annuity,” the letter said. It added: “Although the customer gave Schwartz permission to effect the reduction of withdrawals, he did not authorize Schwartz to impersonate him with the annuity company.”
Consequently, Schwartz violated FINRA Rule 2010, which provides that in the conduct of business, to “observe high standards of commercial honor and just and equitable principles of trade.”
However, in the Broker’s comment on his employment separation disclosure, Schwartz admitted his fault in impersonating his client, stating: “In reviewing a client’s annuity distribution, I suggested he reduce the monthly [amount,] which he agreed was in his interest. The paperwork was signed and submitted to the company on 2 separate occasions with no results. He still received the higher [amount]. We finally did a 3-way call with the company & were on hold 20+ minutes. The client was mad, hung up & called us back telling us to ‘Just get it done.’ The client’s brother was a registered assistant of mine and informed his brother he was not talking to the company again and I needed to get this done. So, I did something I know I shouldn’t have.”
In addition to two disclosures listed on BrokerCheck related to the impersonation of a client, Schwartz has had two other disclosures over the course of his 38 years registered with FINRA. The first was related to a customer dispute during the 19 years he was with The Leaders Group, according to BrokerCheck. That dispute was over market conditions changing and his client believing a policy was no longer viable. It was settled Dec. 1, 2001, at $118,000, BrokerCheck shows.
The other disclosure concerned a customer dispute in which a client alleged that Schwartz guaranteed the client’s money would double in 10 years, but the income base was what doubled in that time period instead, according to BrokerCheck. The dispute was settled Aug. 27, 2018, with Schwartz paying the sum of $100,000 in damages claimed by the client.
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