FOR IMMEDIATE RELEASE
Monday, February 07, 2011
Contact: Laura Egerdal, (573) 526-0949
Carnahan Blocks Two Insurance Agents from Securities Industry
Jefferson City, MO – Missouri Secretary of State Robin Carnahan today announced that insurance agents James Otto and Michael Lees, formerly of Bankers Life and Casualty Company, have been prohibited from working in the Missouri securities industry for five years following activities that led to $574,000 in lost savings for more than 100 Missourians.
According to the consent orders, Otto, of Overland Park, Kan., provided brokerage services for customers of Bankers Life and gave them advice on how to manage their securities investments held at other firms. In a complex scheme, Otto liquidated more than $7 million in securities investments from 180 customer accounts. Otto and other agents then moved most of these funds into fixed or equity indexed annuities sold by Bankers Life that earned Otto and his coworkers commissions.
Otto, who was under the management of Lees, was not registered to sell securities or give investment advice, as required by Missouri law, but that did not stop him from promoting these services to his fellow agents at the insurance company. Both Otto and Lees have been prohibited from registering as a broker or investment adviser representative in Missouri for five years, and the order restricts and limits the sales activities in which either can engage.
“My office will continue going after anyone who gives Missourians financial advice without first registering to do so,” Carnahan said. “We will work hard to keep unfit brokers out of the industry, but Missourians should remember to call our Investor Protection Hotline to make sure anyone giving them financial advice is properly licensed so we can help prevent more cases like this one.”
Otto’s clients knew he was moving their money, but they often ended up in unsuitable investments. Otto set up new accounts for clients at discount brokerage firms, gave himself power of attorney, and transferred the investments to these brokerages. He immediately liquidated the accounts and moved the investments into annuity products. Approximately half of the investors paid the high surrender fees required to get their savings out of the annuities sold by Otto or the other agents that used his services. These consent orders are related to a July 2010 cease and desist order issued against Otto and Lees. That same month their former employer, Bankers Life, agreed to reimburse the impacted investors by returning the $574,000 that was lost.
The Missouri Securities Division continues to investigate the discount brokerage firms that opened dozens of accounts for Otto’s liquidation purposes.
For more information regarding investments and fraud protection, or for information regarding a company or representative, visit the Secretary of State’s online Investor Protection Center at www.MissouriSafeSavings.com or call the toll free Investor Protection Hotline at 1-800-721-7996.
Visit www.sos.mo.gov to find out more about the Missouri Secretary of State’s office.
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