Sandeep Varma – Financial Advisor/Broker Sandeep Varma Previously Suspended from Securities Industry | Goodman & Nekvasil, P.A. May Recover Investor Losses
Sandeep Varma is a licensed financial advisor/broker with FSC Securities Corporation. According to FINRA, Sandeep Varma was fined $15,000 and suspended from the securities industry for 10 business days in February 2018.
According to FINRA Allegations:
Sandeep Varma consented to the sanctions and to the entry of findings that Sandeep Varma used a seminar slide presentation promoting a complex estate planning strategy involving the use of a charitable remainder trust (CRT) which failed to provide a sound basis for evaluating the CRT strategy, failed to provide a balanced discussion of the risks and rewards associated with the strategy, and contained claims that were exaggerated, promissory, and/or misleading. The findings stated that beginning in the early 1990s, Sandeep Varma started employing a strategy with certain customers designed to avoid paying capital gains taxes on the sale of appreciated assets. Under the strategy, customers would typically sell appreciated real estate through a CRT, without immediately paying capital gains tax on the sale, and the proceeds from the sale could then be invested in various investment instruments held within the CRT. Typically, Sandeep Varma recommended that the proceeds from the sale be invested in variable annuities held within the CRT.
At the time the CRT was created, Sandeep Varma’s customers would also typically purchase some form of life insurance policy through an irrevocable children’s trust to replace the value of the appreciated asset for the customers’ heirs. Sandeep Varma’s customers would then take periodic, required income from the CRT and use the income from the CRT to pay, in whole or in part, premiums associated with the life insurance policy Varma recommended to replace the value of the sold appreciated asset. The findings also stated that Sandeep Varma conducted four seminars promoting a strategy involving the use of CRTs that were attended by approximately 70 prospective customers.
During the seminar, Sandeep Varma delivered to these prospective customers a written presentation in the form of a slide deck that he created. Varma’s presentation repeatedly referenced the elimination of capital gains tax on the sale of appreciated assets by using the CRT strategy. The presentation failed to disclose, however, that the strategy only avoided capital gains tax at the time of the sale of the appreciated asset. Varma’s presentation depicted the purchase of a significant life insurance policy to replace for the prospective customers’ heirs the value of the appreciated asset sold to fund the CRT. The presentation, however, failed to disclose that the customers’ ability to pay the life insurance premiums using income from the CRT was dependent on the performance of the investments held by the CRT. The seminar presentation further failed to disclose the potential risk that the life insurance policy could lapse should customers be unable to afford to pay premiums associated with maintaining it or that the life insurance policy payout was dependent on the claims-paying ability of the insurance provider.
The presentation depicted increased income and improved cash flow from employing the CRT strategy, as well as the increased amounts left to the customers’ heirs due to securing the substantial life insurance policy. In doing so, the presentation projected performance of assets held in the CRT in an exaggerated and promissory manner by projecting only positive performance and not clearly disclosing how negative investment performance could affect the strategy.
Goodman & Nekvasil P.A. May Recover Investor Losses on a Charitable Remainder Trust
If you lost money on a charitable remainder trust with Sandeep Varma, and believe the investments may have been unsuitable or otherwise improper for you, we would like to discuss the possibility of your retaining our firm to represent you in an arbitration action concerning Sandeep Varma’s conduct. There is no charge for an evaluation of your case. Further, we handle our cases on a contingency fee basis. This means that unless we recover money for you, we charge no attorney’s fee. Unless you recover any money, you pay us nothing, not even the costs and expenses which the firm will advance on your behalf.
Kalju Nekvasil, Esq., formerly regional counsel with the NASD, now known as FINRA, has practiced in this area of the law for more than 35 years. Goodman & Nekvasil, P.A. has recovered more than $180 million on behalf of victimized investors. If you lost money on investments with Sandeep Varma and would like your case evaluated by a securities attorney (again, there is no charge for an evaluation and all cases are handled on a purely contingency fee basis), please contact us.
Some of the information in this blog post was obtained on 5/12/2020 directly from FINRA BrokerCheck, without any changes. If you believe this information was reported incorrectly, please contact our firm at 1-800-500-4442.
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