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McCabe Rabin, P.A. Wins FINRA Arbitration Arising Out of Life Settlement Transaction

A three-member panel of Financial Industry Regulatory Authority (“FINRA”) arbitrators has found New York-based broker Michael Kerper liable to Florida resident Stanley Bergenfeld for making an unsuitable investment recommendation involving a life settlement transaction.

In this case, Kerper, a licensed insurance agent and registered stockbroker with Royal Alliance Associates, met Mr. Bergenfeld through a mutual acquaintance. Kerper recommended that Mr. Bergenfeld purchase a fixed life insurance policy with the intent of selling the policy death benefit to a third party for an amount that exceeded the total insurance premiums paid.

Mr. Bergenfeld followed Kerper’s recommendation and purchased the policy. Mr. Bergenfeld paid more than $300,000 in insurance premiums, but Kerper, and the life settlement broker he enlisted, did not find a buyer. Eventually, Mr. Bergenfeld could no longer pay the high premiums and the policy lapsed.

McCabe Rabin P.A. assisted Mr. Bergenfeld in bringing a FINRA action against Kerper and his brokerage firm, Royal Alliance, seeking the return of the premiums paid. Mr. Bergenfeld eventually settled his claims with Royal Alliance, with no admission of wrongdoing by the firm, and proceeded to final hearing against Kerper alone to recover the balance of the losses. After a three-day hearing at the FINRA offices in Boca Raton, the arbitrators returned an award in favor of Mr. Bergenfeld. The arbitrators ordered Kerper to pay $145,530 in damages and attorney’s fees.

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