Michael DeLuca Suspended by FINRA Over Alleged Failure to Supervise

Michael DeLuca (CRD #: 4428054), a broker registered with Fortune Financial Services, was recently suspended by FINRA, according to his BrokerCheck record, accessed on February 2, 2023. Investors may have also worked with him through Prosperity Wealth Management (CRD#:174328). If you have questions about his alleged conduct as a broker, read on.

FINRA Suspension

On December 6, 2022, Michael DeLuca consented to the entry of findings that he allegedly failed to reasonably supervise another broker’s recommendations of variable annuity exchanges and surrenders between July 2016 and July 2021.

A Letter of Acceptance, Waiver & Consent (AWC) alleged that Representative A engaged in a pattern of recommending clients exchange their variable annuities without considering whether these recommendations were suitable for them given the surrender charges associated with these transactions. The AWC alleged that the money clients saved by exchanging their “bonus” share class annuities for B-share class annuities was “insignificant” compared to their surrender charges.

Additionally, Representative A allegedly submitted new account documents and variable annuity disclosure paperwork that misrepresented these surrender charges, including 84 exchange applications that allegedly claimed no surrender charges would be incurred. Representative A’s recommended transactions allegedly resulted in $71,386.94 in surrender charges.

The AWC alleged that Michael DeLuca’s responsibilities included the review of variable annuity exchanges for their accuracy and suitability. He allegedly failed to reasonably investigate signs of misrepresentations in Representative A’s paperwork.

For example, one exchange application allegedly stated the client was seeking to exchange 64% of the contract value during the surrender period when the highest they could achieve without incurring surrender charges would be 10% of the contract value.

The AWC concluded that these allegations constituted violations of FINRA Rules 3110, 2330, and 2010.

FINRA Rule 3110

FINRA Rule 3110 requires that firms establish systems of supervision to maintain their compliance with securities regulations. This includes appointing supervisors and providing them with Written Supervisory Procedures (WSPs).

FINRA Rule 2330

FINRA Rule 2330 requires firms to evaluate the suitability of variable annuity exchanges, including whether the client will incur a surrender charge.

FINRA Rule 2010

FINRA Rule 2010 holds brokers to high standards of commercial honor and just and equitable principles of trade.

Sanctions

Michael DeLuca consented to the following sanctions:

• $5,000 fine
• 15-business-day suspension

His suspension ran from January 3 to January 24, 2023.

You can read a copy of the AWC here.

Background Information

Michael DeLuca has passed the following exams:

• Series 66 – Uniform Combined State Law Examination
• Series 63 – Uniform Securities Agent State Law Examination
• Series 99TO – Operations Professional Examination
• SIE – Securities Industry Essentials Examination
• Series 7 – General Securities Representative Examination
• Series 6 – Investment Company Products/Variable Contracts Representative Examination
• Series 24 – General Securities Principal Examination
• Series 51 – Municipal Fund Securities Principal Examination
• Series 26 – Investment Company Products/Variable Contracts Principal Examination

Michael DeLuca is a registered broker in 23 states and the District of Columbia. He is also a registered investment adviser in Pennsylvania.

He has also worked for the following firms:

• Hazard & Siegel Advisory Services (CRD#:151462)
• USA Financial Securities Corporation (CRD#:103857)
• Woodbury Financial Services (CRD#:421)

Kurta Law Can Help

If you worked with Michael DeLuca and you have concerns about your investments, please contact us today at 877-600-0098 or info@kurtalawfirm.com for a free consultation.

For over 20 years, Kurta Law has advocated on behalf of investors who want to recover their investment losses from brokers and brokerage firms. Kurta Law is a nationally recognized law firm and exclusively represents investors against brokers and brokerage firms on a contingency basis. This means that the firm only earns a fee if our securities attorneys recover money on your behalf.