$250,000 MassMutual Fined for Failure to Monitor Rogue Agent


The Massachusetts Securities Division (“Division”) has imposed a $250,000 fine against MML Investors Services LLC (“MMLIS”), a subsidiary of MassMutual, for failing to supervise insurance broker and registered investment advisor Charles J. Evan (“Mr. Evan.”). In another complaint, the Division alleged that Mr. Evana defrauded customers by using low-cost marketing techniques based on fraudulent lies about customers purchasing inappropriate insurance and annuity products.

Although the fine that MMLIS has failed to supervise Mr. Evan is large, it cannot be compared to the $4.75 million fine that MMLIS paid the Division ten months ago for failing to supervise the brokers who were registered. See the Agency Checklists issue of October 4, 2021, “Sec. Of State Fines MassMutual $4.75 Million Over Social Media Persona “Roaring Kitty.”

The Division’s separate complaint against Mr. Evan for reinstatement

Using the Consent Order against MMLIS, the Division filed a separate complaint against Mr. Evan. This complaint required Mr. Evan to provide a certified statement of his benefits, restitution of all benefits and direct or indirect wages and salaries that he earned as a result of his crimes; and to compensate his clients for any money they lose as a result of his fraud.

In the Division’s complaint against Mr. Evan, the Division stated, inter alia:

  • “Mr. Evan ran a simple scheme for almost ten years by taking his clients on high-stakes sales methods and telling lies, lies, and omissions while advising those clients to buy products that are only intended to make a huge profit.”
  • “Throughout this time, Mr. Evan collected thousands of dollars a year from his clients for investment advice, financial planning, and advisory services, all while believing that his clients trusted him.”
  • “Mr. Evan repeatedly hid his intentions for clients to buy products as part of his financial advice and financial planning to clients, but in reality, Mr. Evan wanted to profit from his position as a broker by asking them to buy unlimited products. and large, anonymous commissions.”
  • “In meetings and telephone conversations over the years, Mr. Evan has used low-cost marketing techniques with his many suggestions for clients to purchase mutual funds and life insurance. Mr. Evan has repeatedly called and met with clients face-to-face, speaking aggressively and aggressive in trying to solve the problem of their customers buying the products they promote.
  • “As part of this process, Evan also advised clients to liquidate their assets in their retirement accounts to generate additional, unnecessary cash for life insurance purchases such as investment vehicles. In many cases, Evan told his clients that they would not be able to afford life insurance. and they often said that the money is easy to sell again if they need other things at the time.”

MMLIS failed to monitor Mr. Evan

The Consent Order, which MMLIS has neither accepted nor rejected, states that:

  • MMLIS’s accounting controls failed to ensure Mr. Evan’s accurate disclosure of compensation for providing financial advice.
  • “By failing to comply with its underwriting policies, MMLIS failed to prevent Mr. Evan from forcing customers to purchase additional premiums and pay additional premiums in existing annuities.
  • MMLIS failed to ensure that Mr. Evan told his clients that he had earned thousands of dollars in commissions based on his suggestions for clients to invest in their various annuities.

Termination of the agent’s registration with the MMLIS is

1

Financial Industry Regulatory Authority, Inc. A non-governmental organization that regulates security broker-dealers and security exchanges.

2

The Financial Industry Regulatory Authority, FINRA, is an independent regulator for all securities firms doing business in the United States. FINRA licenses individuals and admits firms to the securities industry, writes rules to govern their behavior, examines them for regulatory compliance, and is authorized by the U.S. Securities and Exchange Commission (SEC) to discipline registered representatives and member firms that fail to comply with federal securities laws and FINRA's rules and regulations. It provides education and qualification examinations to industry professionals. FINRA's mission is to protect investors by making sure the United States securities industry operates fairly and honestly.

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On October 28, 2019, MMLIS suspended Mr. Evan’s registration based on an internal investigation into customer complaints.

On November 13, 2019, the Financial Industry Regulatory Authority (“FINRA”) opened an investigation into Mr. Evan after suspending his registration. Evan refused to provide the information and documents requested by FINRA.

1

Financial Industry Regulatory Authority, Inc. A non-governmental organization that regulates security broker-dealers and security exchanges.

2

The Financial Industry Regulatory Authority, FINRA, is an independent regulator for all securities firms doing business in the United States. FINRA licenses individuals and admits firms to the securities industry, writes rules to govern their behavior, examines them for regulatory compliance, and is authorized by the U.S. Securities and Exchange Commission (SEC) to discipline registered representatives and member firms that fail to comply with federal securities laws and FINRA's rules and regulations. It provides education and qualification examinations to industry professionals. FINRA's mission is to protect investors by making sure the United States securities industry operates fairly and honestly.

” data-gt-translate-attributes=”[{” attribute=””>FINRA fee prohibited Mr. Evan from registering any securities on January 22, 2020, which Mr. Evan agreed to by writing the Consent Letter.

Mr. Evan takes the Fifth

On November 19, 2020, Mr. Evan received permission from the Secretary of State’s Enforcement Section telling him to come and submit a warrant to the Massachusetts Securities Division. Mr. Evan appeared on January 14, 2021, but refused to answer any questions, regarding the protection of the Fifth Amendment against self-incrimination.

A $1 million settlement has been set for Mr. Evan’s wrongdoings

Also, FINRA’s website has listed eight permanent awards in this 2019-2020 term against Mr. Evan, these awards totaled $1,053,359.43

The complaints included in the award are:

  1. The issue is that in 2015, a signature was made on the papers related to the transfer of ownership of the life policy. – Fixed $250,000.00
  2. It was said that Mr. Evan used illegal sales methods and refused to receive commissions, and left a lot to protect the sale of financial products since 2013. – Settlement of $84,928.83
  3. The story that Mr. Evan, starting in 2008, misrepresented and gave false financial advice in the trading of various products, which resulted in financial losses. – Fixed $197,500.00
  4. It was reported that when he met Mr. Evan in 2017, he sold him several convertibles that were found to be unsuitable for his needs. – Fixed $29,250.00
  5. Allegations that signatures related to various accounts and policies sold by Mr. Evan in or around 2012 are not theirs. – Fixed $250,000.00
  6. Allegation that Mr. Evan used unfair trading practices by denying that he received commissions, omitted information, and falsified customer signatures and initials on forms to confirm the sale of financial products from 2013. – Settlement $80,180.68
  7. The issue that Mr. Evan, starting in 2016, has reported errors and inappropriate opinions on the sale of life insurance and annuity. – Fixed $130,000.00
  8. The story that Mr. Evan, starting in 2015, made false and inappropriate assumptions about the sale of life insurance and various annuity products. Mr. Evan’s clients also alleged that Mr. Evan misled them about advisory fees, including commissions paid on variable annuity products. – Fixed $31,500.00
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