GREAT FALLS — The state's top securities regulator has fined a Great Falls insurance agent and former broker $20,000 for violating state securities laws.
State Auditor John Morrison also denied a request from the agent/broker, Randall Knowles, to get a new securities license in the state.
The case against Knowles is tied to another investigation of a former Seeley Lake insurance agent, Mark Payton. State regulators say Payton was selling fixed annuities to Montana customers, most of them elderly, by persuading them to liquidate their securities portfolios.
"Mark didn't have a securities license, so he would take down the information and send it to Randy," said Roberta Cross Guns, the state's attorney in the case.
Knowles, who was a licensed securities broker at the time, would sell clients' existing investments and transfer the money to Payton, who would then buy annuities for those clients that his insurance company sold, the state alleged.
As the "conduit" for the transactions, Knowles was required by law to conduct an analysis of whether the liquidations were suitable for each customer, Cross Guns said.
"This is where (Knowles) got into trouble because he didn't do an analysis on whether it was appropriate to be liquidating assets," said Cross Guns. "That analysis needs to include what the purpose of the account is, and what the client's age is."
Knowles, contacted by e-mail by the Great Falls Tribune, said he couldn't comment because the case is still a "pending matter."
Knowles' securities license became invalid when he left his former employer, FSC Securities Corp., said Lynne Egan, an analyst and bureau chief of the State Auditor's securities division.
But during that time, he met with a longtime client and attempted to do business, Egan said. Instead, he should have told the client he could not manage the account.
Morrison's office ordered Payton to cease securities activities in November 2002. The case against him was settled, and Payton is banned from selling insurance in Montana for at least five years, state officials say.
Knowles has 30 days to file an appeal of the civil action in District Court. He continues to hold a valid license to sell insurance in Montana.