After a nine-day trial, a jury in the Northern District of Georgia has ruled in favor of the Securities and Exchange Commission against a former registered representative of LPL Financial and a firm he co-founded.
In 2017, the SEC charged four former Atlanta-area brokers, including Jonathan Dax Cooke, with inappropriately inducing federal employees to roll over holdings from their federal Thrift Savings Plan retirement account into higher-fee, variable annuity products.
Along with the individual brokers, the SEC’s complaint charges an entity Cooke co-founded called Keystone Capital Partners Inc., known as Federal Employee Benefits Counselors. The SEC alleged the brokers targeted federal employees nearing retirement with sizable funds invested in the TSP while under the supervision of FEBC.
According to the SEC’s allegations, the brokers “sent investors incomplete or modified transaction forms as well as written materials they devised that obscured that the investment was a privately issued variable annuity with no connection to the TSP and would be processed through a private brokerage firm with which the brokers were associated.”
The brokers were alleged to have sold approximately 200 variable annuities with a total face value of approximately $40 million to federal employees, who used monies rolled over from their TSP accounts to fund their purchases. The brokers collectively earned approximately $1.7 million in commissions on these sales, the SEC charged.
“We are pleased with the jury’s verdict holding former registered representative Jonathan Dax Cooke and the entity he co-founded, Keystone Capital Partners Inc., known as Federal Employee Benefit Counselors, liable for fraudulently selling variable annuities to hundreds of federal employees who were at or near retirement age by falsely portraying himself and his company as counselors hired by the federal government to educate federal employees about their retirement benefits and convincing them to roll over funds from their retirement accounts to fund the purchase of higher-fee variable annuity products,” says Gurbir Grewal, SEC division of enforcement director. “This verdict underscores our continuing efforts to protect investors, particularly those who are approaching retirement.”