Securities Law Prof Blog

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

Wednesday, April 4, 2012

Bankers Life Settles Charges of Unlicensed Broker-Dealer and Investment Adviser Activities with States

NASAA announced that a settlement has been reached between Bankers Life and Casualty Company and state securities regulators concluding an investigation of unlicensed/unregistered brokerage activity by the insurance company.The Chicago-based company agreed that it, along with its BLC Financial Services, Inc. (BLCFS) subsidiary, will not engage in the hiring, training or supervision of any registered representatives or investment adviser representatives through March 31, 2015.  Bankers Life also agreed to withdraw the registration of its brokerage subsidiary with the Securities and Exchange Commission and will terminate its membership with FINRA.

The state investigation determined that in 2005, Bankers Life entered into an agreement with UVEST Financial Inc. under which Bankers Life insurance agents who became licensed as registered representatives and/or investment adviser representatives of UVEST would provide brokerage and investment advisory services out of the insurance firm’s branch offices. In 2010, Bankers Life entered into a similar arrangement with ProEquities, Inc., a broker-dealer based in Birmingham, Alabama.

State investigators determined that Bankers Life engaged in brokerage and investment adviser activity, despite not being registered, by affiliating with licensed brokers or other firms and directing the operations, hiring, training, production selection and sales techniques of those firms.          

State securities regulators determined that Bankers Life received approximately $21 million from the two brokerage firms for variable annuity and securities transactions and investment advice between 2005 and 2011.

The settlement calls for Bankers Life to pay $9.9 million to be disbursed among the states where its dual agents were located between 2005 and 2011. The firm also agreed to pay $375,000 to reimburse the states for the cost of the investigation, $260,000 in past licensing and registration fees, and $106,000 to cover the cost of state audits to ensure compliance with the consent order.

Similar settlements were reached with UVEST and ProEquities. UVEST agreed to pay $750,000 and ProEquities agreed to a payment of $435,000 for their role in the relationship with Bankers Life.

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