Recovery For Victims Of Unregistered Missouri Securities Broker

Jefferson City, MO – Missouri Secretary of State Robin Carnahan today announced that $574,000 will be returned to more than 100 investors, many of them seniors, who suffered losses after their savings were mishandled by a former Bankers Life and Casualty Company insurance agent, James Otto.

According to the cease and desist order, Otto, of Overland Park, Kan., provided brokerage services for customers of Bankers Life and gave advice on how to manage their securities investments held at other firms. Otto was not registered to sell securities or give investment advice, as required by Missouri law, but that did not stop him from promoting these services to his fellow agents at the insurance company.

In a complex scheme, Otto allegedly liquidated more than $7,100,000 in securities investments from 180 customer accounts and moved most of these funds into fixed or equity indexed annuities sold by Bankers Life. To do this, Otto set up new accounts for clients at discount brokerage firms, gave himself power of attorney, and transferred the investments to these brokerages. He immediately liquidated the accounts and moved the investments into annuity products that earned commissions for Otto and his coworkers.

According to the order, Otto’s clients knew he was moving their money, but they often ended up in unsuitable investments. Approximately half of the investors paid the high surrender fees required to get their savings out of the annuities sold by Otto or the other agents that used his services.

“All too often, seniors are sold complex equity indexed annuities just so a salesman can profit, and that is wrong,” Carnahan said. “I will continue to crack down on agents and companies who make unsuitable annuity sales, especially those that target Missouri’s seniors.”

In addition to the cease and desist order, a separate consent order requires Bankers Life to pay restitution to investors in excess of $574,000, which consists of the commissions paid to Bankers Life agents, interest, and surrender fees incurred by the investors. Further, Bankers Life has agreed to waive any surrender fees in the future for any investors who purchased products through Otto’s operation. Bankers Life will pay $214,000 to the Missouri Investor Education and Protection Fund.

Both orders are available online. James Otto now has 30 days to respond to the cease and desist order and request a hearing. The Missouri Securities Division continues to investigate the discount brokerage firms that opened dozens of accounts for Otto’s liquidation purposes. The Securities Division is working with other regulators on this matter, including the Office of the Kansas Securities Commissioner.

For more information regarding investments and fraud protection, or for information regarding a company or representative, the toll free Investor Protection Hotline at 1-800-721-7996, or visit the Secretary of State’s online Investor Protection Center at www.MissouriSafeSavings.com.