Regulators Probe Prudential Agent Who Left Last Job Under a Cloud
Securities regulators are investigating whether an Orange County insurance agent--hired by Prudential Insurance despite a lengthy record of customer complaints, lawsuits and disciplinary investigations--may have continued to use deceitful sales tactics since joining the company, public records show.
The agent, Anthony J. Amaradio, 41, was hired by Prudential in 1991 after he left the Equitable Assurance Society under a cloud. His allegedly illegal activities at Equitable were cited by the National Assn. of Securities Dealers two weeks ago in a formal settlement in which it censured and imposed a $1.5-million fine on that company.
Amaradio has denied any wrongdoing. But records filed with the Securities and Exchange Commission show that the NASD is now investigating whether Amaradio continued to place allegedly false or misleading radio advertising and circulate misleading sales literature while working for Prudential.
In an interview, Prudential Insurance spokesman Joseph A. Vecchione said Prudential had learned late last week of the additional NASD investigation into recent activities by Amaradio and said the firm was beginning an internal inquiry.
“We intend to pursue full details,” Vecchione said. “Based on those details, we will predicate action if any is necessary.”
The giant Newark, N.J.-based insurer is already trying to contain damage to its reputation from a stream of unfavorable disclosures relating to the mammoth settlement by its brokerage subsidiary, Prudential Securities, which was accused of defrauding hundreds of thousands of customers through its sales of limited partnerships. The NASD is looking into whether Amaradio’s ads were designed to deceive customers about the type of insurance or investment products he sells.
No charges have been filed against Amaradio or Prudential in connection with the ads. But the NASD has filed disciplinary charges directly related to Amaradio’s advertising against a small Wisconsin securities brokerage with which he is also affiliated.
In an interview, Amaradio--who operates Prudential’s AJA Agency in Irvine and is one of a handful of Prudential’s top-producing agents--strongly denied any wrongdoing, including placing any misleading ads.
“I believe all my ads were proper,” he said. His lawyer, Laurence S. Schultz, said he was not aware of any internal investigation of Amaradio by Prudential.
Amaradio currently advertises on KMNY-AM, an all-business talk radio station in Pomona, and KBRT, a Christian talk radio station in Costa Mesa.
In the NASD settlement filed two weeks ago, regulators accused Equitable of failing to stop Amaradio from misleading investors--in part through allegedly false advertising--into buying large life insurance policies with steep premiums. Customers allegedly were led to believe they were making retirement investments. Amaradio received commissions equal to 40% to 50% of the first year’s premiums, according to current and former Equitable agents.
Equitable settled with the NASD without admitting or denying the charges.
Amaradio, initially working for Equitable in the suburbs of Detroit, advertised heavily on that area’s Christian radio stations. He continues to advertise and sell insurance and investment products in Michigan, as well as Southern California.
Separate NASD disciplinary proceedings are pending against Amaradio for his activities at Equitable. The NASD charged him with fraud and deceit in the sale of variable life insurance policies for the firm. Variable life policies are those on which the death benefit and surrender value depend on how well an underlying portfolio of securities performs. Amaradio is vigorously contesting the charges.
But he agreed to a fine and brief suspension in December to settle an earlier set of unrelated NASD charges that accused him of failing to disclose that he had sold customers stock in a company in which he had a personal financial stake. Amaradio neither admitted nor denied those charges. In an interview, he described them as minor “technical violations.”
The SEC documents relating to Amaradio’s more recent activities show that the NASD has already filed disciplinary charges against Coordinated Capital Securities, the Wisconsin brokerage with which he is affiliated. The charges directly relate to the ads Amaradio placed while simultaneously working for Prudential.
In what Prudential confirmed is an extremely unusual arrangement, the insurance company has allowed Amaradio to maintain dual employment, working both for Prudential and Coordinated Capital. The arrangement allows him to sell mutual funds and other investment products that are not authorized by Prudential.
Several large insurance companies, including Equitable, say they no longer permit such dual employment. Insurance companies generally frown on such arrangements because they make supervision difficult. They can also raise problems if agents sell investment products that have not been examined in advance and approved by the insurance companies.
Prudential’s Vecchione said Amaradio is one of “no more than 40 or 50" among Prudential’s 21,000 insurance agents who are allowed such double affiliation. He said Coordinated Capital was responsible for supervising Amaradio’s sales of that company’s products.
The documents obtained by The Times show that Coordinated Capital has offered to settle NASD charges that it allowed Amaradio and others to place ads that contained “misleading statements and claims” and “exaggerated language not reflecting the degree of risk associated with the investments.”
In a letter to the NASD filed with the settlement offer, Coordinated Capital’s president, Larry E. Peters, said many of the allegedly false ads placed by Amaradio were for Prudential products as well as Coordinated Capital’s mutual funds. “In fact, nine out of the 19 ads included with this letter specifically mentioned and marketed variable products which are offered through Pruco (Prudential Insurance) and not Coordinated Capital,” the letter says.
In an interview, Peters said Coordinated is near a final agreement on settlement of the NASD charges.
“I didn’t do anything wrong,” Amaradio said. “There was never anything misleading.” He added, “We feel we’re a state-of-the-art compliance shop,” referring to compliance with securities rules and regulations.
E. Craig Dearborn--head of the NASD’s Chicago office, which is handling the Amaradio and Coordinated Capital investigations--declined to comment on whether any additional charges may be filed against Amaradio or to say if investigators are looking at any role played by Prudential in allowing the advertising. Prudential has said it has not been notified that it is the subject of any investigation related to the ads.