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Woodbury fined by State Regulators and for Lack of Supervision

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Woodbury Financial was fined $12,000 by a state regulator for stockbrokers making identical recommendations to customers with variable annuities, for identical allocations in variable annuity subaccounts. The identical recommendations may have been unsuitable for some of the customers. Woodbury Financial did not have sufficient supervisory procedures to detect if stockbrokers were making identical recommendations to different customers. Identical recommendations may be a red flag of something that needs further review, to determine if the recommendations to customers are appropriate and suitable. This is a significant concern with variable annuities, which are often marketed as conservative long-term investments, but which may be much more risky, if the stockbroker recommends subaccounts that are too risky.

Woodbury Financial was fined $250,000 for lacking supervision which permitted stockbrokers in Arizona to use post office boxes to defraud certain customers. Woodbury Financial was required to have appropriate supervision requirements including a review of requests to change mailing addresses to post office boxes. Because Woodbury Financial did not have sufficient supervision tools, it did not detect the stockbrokers wrongful activity. The two stockbrokers involved –Mayra Angulo and Mark Islas–caused more than $2,000,000 in losses to customers.



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