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Aug. 02--In two consent orders, the Arkansas securities commissioner approved a settlement between staff at the Arkansas Securities Department and two insurance agents, resulting in a $2,500 fine for each agent.
Insurance agents Christy Coffman and Trent Dodds participated in a Social Security seminar in Fort Smith with two other insurance agents. A field marketing organization -- which is a business organization through which insurance agents market and sell insurance products, and from which the agents obtain training and support -- produced the seminar, according to a news release from the Arkansas Securities Department.
The field marketing organization sent direct-mail invitations targeting senior citizens at or close to the age to begin drawing Social Security. The organization's marketing materials referred to the four agents as "The Retirement Pros," the release states.
Seminar attendees could arrange individual meetings with the agents. A medically retired 64-year-old resident opted for an individual meeting, and Coffman and Dodds met with him and his wife at their home. The man and his wife told Coffman and Dodds that they were looking for a second income stream to pay the wife's health insurance premiums until she became eligible for Medicare at 65, and allow her to retire at 63, according to the release.
Coffman told the man that his securities were not totally safe from a judgment creditor, and Dodds told the man that one of his securities accounts was not doing well. Coffman and Dodds recommended that the man liquidate about 60 percent of his securities holdings and replace them with an equity indexed annuity that would effectively tie his money up for 14 years, the release states.
At first, the man agreed, but when he realized that there was no income stream and that his money would be tied up for quite some time, he called staff at the Arkansas Securities Department and canceled the transaction, according to the release.
Arkansas Securities Commission A. Heath Abshure found that Coffman and Dodds acted as unregistered investment advisers in recommending that the man sell securities and replace them with an equity indexed annuity. Abshure also found that the way in which this investment came about -- hosting a seminar about Social Security to senior citizens with four insurance agents whose only possible source of income would be commissions on the sale of insurance products, obtaining financial information about the attendee in a one-on-one meeting and recommending the replacement of securities with an equity indexed annuity after casting aspersions on securities -- violated the Arkansas Securities Act, the release states.
The actions of Coffman and Dodds violated the Arkansas Securities Act as an "act, practice or course of business that operates or would operate as a fraud or deceit" upon another person, according to the release.
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