The Logan Group Securities: Charged by FINRA? The Truth Exposed (2024)
History Of The Logan Group Securities
The Logan Group 0became a FINRA member in April 1996. The firm is a sole
proprietorship with its main office (and only branch location) in Roseville, California.
The firm’s owner is its only registered person. The Logan Group specializes in retirement
planning for educators in the greater Sacramento area. Respondent does not have any
relevant formal disciplinary history.The Logan Group Securities Report
This matter originated from FINRA’s 2018 cycle examination of the firm.
Variable Annuities
The Logan Group primarily sells mutual funds and variable annuities to educators
through salary deferred 403(b) accounts. The fn-m enters into selling agreements with
fund companies on the approved vendor list for Sacramento school districts. Variable
annuity sales accounted for approximately 80% of the firm’s business between October
2017 and September 2018.
Variable annuities are complex products that permit customers to choose among a variety
of contract features and options. Due to the complexity of variable annuities and the
inherent risk of sales practice violations they present, FINRA requires that firms enhance
their supervisory procedures and provide more comprehensive and targeted protection to
investors who purchase or exchange these products.
From October 2017 to September 2018, the Logan Group sold variable annuity contracts
with different share class options, including B shares and L shares. B-share contracts are
the most common share class sold in the industry and typically have a seven-year
surrender period. L-share contracts typically provide a shorter surrender period of three
to four years. The fees associated with an L-share contract are typically between 35 and
50 basis points higher annually than most B-share contracts. These fees are assessed as
long as the contract is held unless the contract provides for a “persistency credit.”1
Respondent Failed to Establish, Maintain, and Enforce Written Procedures for the
Sale of Multi-Share Class Variable Annuities
FINRA Rule 2330 requires that firms and representatives who recommend variable
annuities have a reasonable basis to conclude the proposed recommendations are suitable
and that the customers have been informed of various features of the variable annuities,
such as the potential surrender periods and surrender charges, potential tax penalties, and
potential charges for and features of riders.
FINRA Rule 3110(b) requires each member fn-m to establish, maintain, and enforce
written procedures to supervise the types of business in which it engages and to supervise
the activities of registered representatives, registered principals, and other associated
persons that are reasonably designed to achieve compliance with applicable securities
laws, regulations and rules of FINRA. Rule 3110(b) also requires member firms to
promptly amend written supervisory procedures to reflect changes in its supervisory
systems. 2
i Some L-share contracts have a specific provision called a “persistency credit,” which reduces the annual fees so
that the contract is comparable to a B-share contract after the product is held for a certain period, generally seven to
ten years. The L-share contract sold by the Logan Group had a slightly lower up-front commission than its B-share
counterpart.
2FINRA Rule 2010 requires a member firm, in the conduct of its business, to observe high standards of commercial
honor and just and equitable principles of trade. Violations of FINRA Rules 2330 and 3110 also constitute violations
of FINRA Rule 2010.
2 2
Variable Annuities
The Logan Group primarily sells mutual funds and variable annuities to educators
through salary deferred 403(b) accounts. The firm enters into selling agreements with
fund companies on the approved vendor list for Sacramento school districts. Variable
annuity sales accounted for approximately 80% of the firm’s business between October
2017 and September 2018.
Variable annuities are complex products that permit customers to choose among a variety
of contract features and options. Due to the complexity of variable annuities and the
inherent risk of sales practice violations they present, FINRA requires that firms enhance
their supervisory procedures and provide more comprehensive and targeted protection to
investors who purchase or exchange these products.
From October 2017 to September 2018, the Logan Group sold variable annuity contracts
with different share class options, including B shares and L shares. B-share contracts are
the most common share class sold in the industry and typically have a seven-year
surrender period. L-share contracts typically provide a shorter surrender period of three
to four years. The fees associated with an L-share contract are typically between 35 and
50 basis points higher annually than most B-share contracts. These fees are assessed as
long as the contract is held unless the contract provides for a “persistency credit.”1
How can you spot a broker who is trying to deceive you?
A broker’s credentials, registration, and job history can be reviewed using BrokerCheck, a free online tool provided by FINRA. Disputes with clients, disciplinary actions, and specific financial and criminal matters on the broker’s record are all covered in the disclosure portion of BrokerCheck.
Respondent Failed to Establish, Maintain, and Enforce Written Procedures for the
Sale of Multi-Share Class Variable Annuities
FINRA Rule 2330 requires that firms and representatives who recommend variable
annuities have a reasonable basis to conclude the proposed recommendations are suitable
and that the customers have been informed of various features of the variable annuities,
such as the potential surrender periods and surrender charges, potential tax penalties, and
potential charges for and features of riders.
FINRA Rule 3110(b) requires each member firm to establish, maintain, and enforce
written procedures to supervise the types of business in which it engages and to supervise
the activities of registered representatives, registered principals, and other associated
persons that are reasonably designed to achieve compliance with applicable securities
laws, regulations and rules of FINRA. Rule 3110(b) also requires member firms to
promptly amend written supervisory procedures to reflect changes in its supervisory
systems.
Read about: Richard Michael Wesselt
From October 2017 through September 2018, the firm sold 25 variable annuities with
investments of over $25,000. Nineteen customers purchased 24 L-share contracts,
totaling approximately 2.8 million in sales.3During that period, the fn-m failed to
establish, maintain, and enforce written supervisory procedures related to the
recommendation and sale of different variable annuity share classes, specifically Lshares, which were the most common type of share class sold by the fn-m. Though it
prepared an update to its procedures, the firm failed to implement that update after it
advised FINRA that it would on January 29, 2016.
The Logan Group also advised FINRA on March 18, 2016, that it would document its
review of variable annuity options with customers by printing a document that reflected
the expense ratios of the different types of variable annuities. Upon sale, the firm said it
would have customers initial the printout to document that they had reviewed the expense
ratios of different variable annuities. The Logan Group failed to follow these procedures
for all 25 variable annuities it sold between October 2017 and September 2018.
During the same period, the Logan Group failed to enforce its written supervisory
procedures that required customers to complete a Variable Annuity Disclosure Form
prior to any variable annuity investment. The Variable Annuity Disclosure Form
highlighted various features of the annuity selected by the customer. From October 2017
through September 2018, the Logan Group changed its supervisory system to use forms
provided by annuity companies to describe features of the L-share contracts it
recommended to customers in lieu of Variable Annuity Disclosure Forms. The firm did
not amend its written supervisory procedures to reflect its new system, and it failed to
enforce the written procedure to have its L-share contract customers fill out the Variable
Annuity Disclosure Form. FINRA previously notified the firm of its failure to enforce
this written procedure, but the firm failed to modify its procedures or enforce the
procedures as written.
Finally, the Logan Group failed to collect the investment objective and risk tolerance
information for three L-share contract customers. While the firm’s customers are
primarily educators with similar incomes, investment objectives, and risk tolerances,
Rule 2330 requires firms to record customer information, such as investment objectives,
prior to recommending the purchase of variable annuities.
Therefore, Respondent violated FINRA Rules 2330, 3110(b), and 2010.
Penalties, Punishments & Sanctions
■ a censure and
a $15,000 fine.
Respondent agrees to pay the monetary sanction upon notice that this AWC has been
accepted and that such payment is due and payable. Respondent has submitted an
Election of Payment form showing the method by which it proposes to pay the fine
imposed.
Respondent specifically and voluntarily waives any right to claim an inability to pay, now
or at any time after the execution of this AWC, the monetary sanction imposed in this
matter.
The Logan Group Securities Review
From October 2017 through September 2018, the Logan Group failed to establish,
maintain, and enforce written supervisory procedures, reasonably designed to achieve
compliance with applicable securities laws and regulations, and FINRA rules concerning
investment recommendations of multi-share class variable annuities. As a result, the firm
violated FINRA Rules 2330, 3110(b), and 2010.
How To Spot A Fraud Finance Advisor (Infographic)
Help For Victims Of The Logan Group Securities
If you have lost funds because of misrepresentation, unsuitable investment, or unsuitable investment strategy from The Logan Group Securities. Then you can take legal action and get justice. Fraud, Malpractice & dereliction of duty should not be taken lightly, especially in this industry. We highly suggest that you notify authorities or seek legal action if your financial advisor or brokerage firm fails to abide by FINRA’s rules are regulations.
Read the full report for: National Securities Corporation
Financial advisors are regulatory & legally obligated to suggest (recommend) the most suitable investments/investment strategies to their clients. Their suggestions should have their client’s best interests and should be appropriate for their client’s goals and needs. Similarly, the brokerage firm which hires financial advisors also has a regulatory & legal obligation to keep a close watch and supervise their Financial Advisors’ practices & behavior. They need to make sure that the financial advisor is not being manipulative or having an unreasonable bias towards certain investments. If the financial advisor and/or the brokerage firm breaches these duties, then the client/customer may be entitled to a full or partial recovery of their losses.
Financial advisors need to have the interest of their clients when giving suggestions related to investments and investment strategies. Reasonable basis suitability requires the advisor to do their best to analyze & identify the risks and rewards associated with their suggested investment and/or investment strategy.
Dr. Henrique Duck, PhD in Media Studies and Critical Theory, specializes in writing detailed critics stories and reviews. He has contributed to prominent newspapers and websites, providing insightful analysis of media content and its effects on society.
