Securities Fraud and Mismanagement

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Scott Norvell is accused of misrepresenting aspects of annuity products. Norvell, operating in Omaha, Nebraska, is and advisor with Brokers Financial, and previously with LPL and Cetera. Advisors commonly engage in the high-cost practice of variable annuity fraud, and variable annuity switching in particular, due to the high commissions at stake. We have represented annuity victims for over 20 years and know how the high commissions of variable annuities can lead an advisor to misrepresent the investment.

On November 22, 2023, the regulator overseeing securities brokers, FINRA, suspended Norvell from the securities industry for a period of two months. Norvell entered into an agreement for this sanction. While he did not admit to the findings, he also did not deny the findings. The settlement allowed Norvell to avoid a greater sanction if the matter went to trial.

Norvell negligently misrepresented the death benefits that customers would receive following exchanging their existing variable annuity products for a different variable annuity product.  Annuity switching is a form of fraud. There are very few reasons to switch from one annuity to another, other than the high commission that the advisor receives.

States and federal regulators take annuity switching seriously. A broker can receive, and the investor can pay in costs, around 15% of the sale. FINRA has special rules to prevent annuity switching. States can have strict rules that sometimes can entail an investor not only receiving a written warning but requires the advisor to read the warning out loud.

The findings stated that Norvell negligently misrepresented to his investors that the new product had a guaranteed death benefit that was equal to the greater of the account value or the customer’s contributions, less adjusted withdrawals. However, the guaranteed death benefit was only available by selecting an optional rider on the application. Norvell failed to select the rider on the applications for these transactions or collect the additional fee. As a result, the customers did not receive a guaranteed death benefit and switched annuities for no reason.

A majority of the transactions took place after Norvell’s supervisor had notified him that he had failed to select the optional death benefit rider in connection with a different transaction. The findings also stated that Norvell caused his advisory firm to maintain inaccurate books by falsifying signatures of senior customers by electronically signing documents on their behalf. Although Norvell had prior permission from the customers, the firm prohibited signing a customer’s name or initials regardless of the customer’s knowledge or consent.

In addition, Norvell falsely attested in a compliance questionnaire that he had not signed or affixed another person’s signature on a document.

This is not the first time Norvell has found himself in legal trouble. Investors previously sued him three times for false or incomplete information in the sale of investment products. At least two of these prior complaints involved annuities. Norvell has also previously faced criminal charges for providing false information. While it appears that none of these prior allegations resulted in a verdict against Norvell, the allegations should have put his employers on notice of the need to heighted the supervision of Norvell.

Scott Norvell took advantage of the fine pint.
Scott Norvell took advantage of investors not knowing the costs of their annuities.