The Securities and Exchange Commission yesterday instituted an enforcement action against a New York brokerage firm for working a fraudulent variable annuities sale to the detriment of senior citizens.
The SEC alleges that Prime Capital Services (PCS) recruited elderly investors to seminars in which a free lunch was provided, seminars which revolved around the sale of variable annuities. After the lunch, seminar attendees were persuaded to schedule one-on-one appointments in which representatives from PCS pitched the annuities.
PCS representatives allegedly concealed high costs, lock-in periods, and other information relating to the sales contracts.
“They used free lunches as the low-tech bait for their high-scale scheme,” said Robert Khuzami, Director of the SEC’s Division of Enforcement. “These con men lured elderly and retired investors into purchasing highly unsuitable variable annuities, enriching themselves with commissions while ignoring the financial goals of their victims.”
The alleged schemers are PCS employees Eric J. Brown, Matthew J. Collins, Kevin J. Walsh, and Mark W. Wells, who pressured their clients into buying annuities without fully disclosing the terms of the contracts.