FINRA Arbitrators Award $2.25 Million Over Life Insurance Strategy
From the desk of Jim Eccleston at Eccleston Law
A former financial advisor must pay $2.25 million to clients who alleged he recommended a high-risk life insurance strategy that resulted in significant losses, according to a Financial Industry Regulatory Authority (FINRA) arbitration award.
As reported by AdvisorHub, the dispute involved claims brought by a Chicago family representing the estate of Peter Apostal against former broker Matthew K. Wilkes and several firms where he previously worked, including Wells Fargo, Raymond James Financial Services, FSIC, and TrustFirst. According to AdvisorHub, the family alleged that Wilkes recommended a premium-financed indexed universal life insurance (IUL) strategy that relied on borrowed funds to support a market-linked insurance policy.
The claimants asserted that the strategy exposed the family to substantial risk while generating significant commissions for Wilkes. They sought more than $9.5 million in damages and alleged, among other claims, unsuitable recommendations, breach of fiduciary duty, negligence, and failure to supervise.
Wilkes and the claimants ultimately agreed to a stipulated award, avoiding a full evidentiary hearing. The arbitration panel determined that Wilkes was liable for $2.4 million in damages. However, the award was reduced by $150,000 to account for funds previously paid or agreed to by an insurance carrier on his behalf, resulting in a final payment obligation of $2.25 million.
Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.
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