Planmember Securities' Reps Face Possible Fines and Loss of Registration in Texas
Jimmy Wayne Freeman, Jr. and Kris Bradford Rhoden face fines of $100,000 each and the possibility of getting their licenses yanked for the improper sales of life settlement notes, according to Investment News. Both brokers, who were employed by Planmember Securities Corporation out of Carpinteria, CA, are accused of peddling note agreements backed by life insurance policies and an Immediate Income Investment Plan, which involved a five year note backed by life insurance policies, plus a five year fixed biweekly income account. The sales of products in question occurred between June 2008 and February 2009 and were products issued by National Life Settlements LLC, a firm that what shuttered by Texas Securities Board officials in 2009 after it had sold $30 million worth of bogus promissory notes to teachers and state retirees.
The pair is scheduled to make an appearance before at the State Office of Administrative Hearings on August 5, 2011 where it will be determined whether they will be fined and/or lose their securities licenses, according to the Texas State Securities Board. Freeman and Rhoden have 30 days to contest the allegations by the regulatory department.
The allegations are that Freeman and Rhoden failed to follow Planmember’s supervisory procedures that prohibited private securities transactions and required prior written authorization before conducting securities transactions outside the normal course of business. The men also did not obtain permission from Planmember to participate in an outside business activity resulting in commissions for selling away and in response to compliance questionnaires Freeman and Rhoden denied selling such products. Finally, the pair used personal email accounts to communicate with Planmember customers regarding the investments and was delinquent in updating their U-4 forms to indicate they were selling life settlement notes.