DennisBeaverApril 23, 2011 (Original publish date) • By Dennis Beaver

Today’s story will be of interest to anyone who understands the importance of saving money for that rainy day and retirement. Despite all the bad news, there are still lots of folks who have done the right thing: just saved money. Sure, there’s not much in the way of interest being paid at present, but it’s still money in nice, FDIC-insured bank accounts.

But not for long if some of your bank’s employees have anything to do with it. As we were told by a vice president of investments and financial advisor for a major bank, “for anyone with $50,000 or more in a low-interest bank savings account or CD, they are a target of that bank’s investment advisors.”

In fact, at some institutions, all you need is $10,000 to become a target we learned from a number of other sources.

You might be phoned around the time a CD is maturing, or when you come into the bank, and either your regular banker or even a teller will ask if you would like to earn more interest. Usually everyone says yes, and then an appointment is set up to meet with an investment advisor.

“During that meeting, we try to sell an investment – a mutual fund or annuity – something which takes their funds out of an FDIC-insured account, might have better financial returns, but which earns us and the bank a commission.

“I have seen so many unsophisticated people who should never have been in those things and lost a great deal of money,” the financial advisor told You and the Law on the condition of not revealing his name.

The advisor had a history

In late 2010, at the recommendation of their personal banker “to help us get more interest on our savings,” Nick and Marva met with David, a financial advisor with a major bank.

The couple did not know it at the time, and also did not know how to check out a broker’s past, but David had a complaint history with FINRA, the Financial Industry Regulatory Authority. The retired couple were about to discover that history does indeed repeat itself – and it has a price tag.

“We have always been savers, and had never before purchased shares in a mutual fund,” Nick explained.

“Our nature is to be cautious, and we were very specific about what we did not want to own,” Marva stressed.

“We did not want any investment with surrender charges. So, if we decided just to sell, we understood share values could go up or down, but we did not want to be hit with a fee for getting out,” the couple told David during their several meetings.

“As he was also a certified financial planner and a bank vice president, this should have meant a higher level of knowledge and competence than the average stockbroker, we thought,” Nick added.

David has admitted to this writer that he was aware of the couple’s “no surrender charge or penalty” requirement well before selling them $200,000 in two different mutual funds, and that he thought there was no such penalty.

What do you mean I just lost $2,000?

“Within a few days, we had an odd feeling about these funds, about everything,” Marva explained, “and we told David to just sell and get us out.” A few days later, Nick phoned David, and then learned that one of the funds had a surrender fee of $2,000.

“I didn’t know it had a charge when I sold it to you,” the bank vice president stated, without even so much as an “I’m sorry,” and certainly not offering to take responsibility.

“Legally, it was his business to know if there was a surrender charge, since the information is easily obtainable for brokers,” commented Philadelphia securities attorney Nicholas J. Guiliano when we discussed the facts of this case. “This amounts to a clear misrepresentation, and the couple are owed a complete refund of their losses. There is no excuse at all.”

We also obtained opinions from three stockbrokers, each having more than 20 years experience with major investment companies. They confirmed that David and the bank were responsible for the loss. “It was his duty to know, and he could easily have discovered if there was a surrender fee,” one said.

Initially, David’s supervisor and other bank personnel accepted responsibility. Everyone Nick and Marva spoke with locally assured them that a refund was clearly in order. But soon all of this “Let’s do the right thing” stance would change. Ever so gradually, the nice people at in the investments department of the bank looked for a way to blame the customer.

Next week: The matter reaches the bank’s legal department, where common sense is in extremely short supply.


Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.



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