(FINRA Case #2016050474001)
Donald Lane Preston (CRD #4704220, Powell, Ohio) – An AWC (Accept, Waiver & Consent) was issued in which Preston was assessed a deferred fine of $10,000, suspended from association with any FINRA member in all capacities for six months, ordered to pay $3,515.51, plus interest, in deferred restitution of fees to a customer and ordered to pay $1,427.39, plus interest, in deferred disgorgement of commissions received.
Without admitting or denying the findings, Preston consented to the sanctions and to the entry of findings that he recommended variable annuity exchanges and a mutual fund investment to a customer without having a reasonable basis to believe that the proposed investments were suitable.
The findings stated that at the time Preston recommended the investments, he knew that the customer was unemployed and needed ready access to cash for his living and medical expenses.
The new variable annuity featured increased fees and expenses, and resulted in the loss of a joint death benefit with an annual increase to its guaranteed payout. In addition, Preston recommended that the customer withdraw $100,000 from his variable annuity and invest it in Class A Shares of an individual retirement account (IRA) mutual fund, a long-term investment with higher associated fees and commissions.
The firm approved the proposed investment, relying on false statements Preston made in the new account application regarding the customer’s liquidity needs and the source of funds. The customer incurred fees of $3,515.51 and Preston earned a commission of $1,427.39.
Preston also recommended that the customer invest the balance of his IRA mutual fund, approximately $59,000, in another variable annuity, and again the proposed transaction featured increased penalties, fees and expenses, as well as the loss of the guaranteed joint death benefit.
The findings also stated that Preston willfully failed to disclose a tax lien and timely disclose a compromise with creditors on an amended Form U4. The findings also included that Preston made false statements to his member firm in connection with his attempts to obtain approval of the proposed variable annuity exchanges and the customer’s mutual fund investment. Preston also made false attestations on the firm’s compliance questionnaires about his pending liens and that he had completed and submitted all of the forms the firm required when making an investment recommendation, when, in fact, that was not true. FINRA found that Preston caused his firm to maintain inaccurate books and records by misrepresenting the source of funds for a proposed mutual fund purchase on the firm’s new account application.
In Preston’s 12 years of work history he worked for PFS Investments Inc. (CRD# 10111) until June of 2016 when he was allowed to resign due to allegations.
The suspension is in effect from June 18, 2018, through December 17, 2018.
If you feel you have been misled or taken advantage by Donald L. Preston or any Broker and wish to discuss legal action, please contact Darren Blum at 1-877-786-2552 (1-877-STOCK LAW), www.stockattorneys.com for a free consultation.