Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

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Thursday, December 6, 2007

SEC Charges Broker with Selling Customers' Information to Insurance Agents

The SEC has filed a complaint alleging that from December 2002 through August 2005, Sidney Mondschein, former branch manager of a California office of WFS Investments, Inc., sold the names and other confidential personal information of over 500 of his customers, virtually all of them senior citizens, to six different insurance agents. According to the complaint, Mondschein sold this information as sales "leads" to enable insurance agents to solicit these customers, many of whom had already purchased fixed or equity-indexed annuity products, to buy additional annuity products.To facilitate this fraudulent scheme, Mondschein created a separate entity, called UNCI, Inc., to market insurance leads, collect leads fees, and participate in the commissions that those leads generated. In addition, according to the complaint, Mondschein developed an extensive securities liquidation business that he marketed exclusively to insurance agents, who recommended to their clients that they use Mondschein, instead of their existing broker, to sell their securities. The complaint alleges that Mondschein collected substantial brokerage commissions and other fees for selling the securities of elderly persons to fund their annuity purchases.

http://lawprofessors.typepad.com/securities/2007/12/sec-charges-bro.html

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