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Mass. secretary of state files charges against investment adviser

Secretary of State William F. Galvin filed suit against Roger S. Zullo of LPL Financial, alleging he defrauded clients.
Secretary of State William F. Galvin filed suit against Roger S. Zullo of LPL Financial, alleging he defrauded clients.Jessica Rinaldi/Globe Staff/File 2013/Globe Staff/file

Secretary of State William F. Galvin on Thursday filed civil fraud charges against an investment adviser with Boston-based LPL Financial for allegedly selling costly variable annuities to retirees and health care workers, reaping $1.8 million in commissions.

The adviser, Roger S. Zullo, allegedly sold unsuitable annuity investments to at least 11 clients, generating large payouts for himself and the brokerage firm.

In one case, according to the complaint, Zullo in 2015 moved a client over age 80 and in declining health into a “deferred” annuity that would not provide her any income for at least two years. He had the woman meet him at a subway station near his office to sign the paperwork, according to the complaint, for an investment that cost her $1,391 in surrender fees and “deprived the client of income she relied on to pay for the basic costs of living.”

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“The annuity switch provided Zullo and LPL with cash up front, while devastating the client financially,’’ the complaint said. Galvin’s office alleged that Zullo knew the product would not provide immediate income.

A lawyer for Zullo was not immediately available for comment.

In a statement, LPL spokesman Jeffrey Mochal said, “We take our responsibility to supervise very seriously and are committed to serving our investors. We are reviewing the matter and hope to work with the Massachusetts Securities Division to reach a full resolution.”

Galvin alleged that LPL failed to properly supervise Zullo, instead rewarding him by naming him to the firm’s “chairman’s club” for top annuity producers, despite red flags about his sales tactics.

A supervisor allegedly warned LPL managers in 2014 that Zullo was selling a lot of a single product, and had a pattern of switching customers into new annuities every six or seven years to generate commissions.

Galvin and the Securities Division he oversees are looking to permanently bar Zullo from the securities business in Massachusetts.

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The complaint calls for Zullo and LPL to repay clients for their losses. It also calls on LPL to retain an independent investigator and compliance consultant to probe Zullo’s annuity sales and recommend improvements to the firm’s supervisory process.

Galvin said there could be more clients affected by Zullo’s practices. Zullo allegedly told Securities Division investigators that he started pursuing clients in health care facilities as far back as 1987, through investment seminars at Boston hospitals.


Beth Healy can be reached at beth.healy@globe.com. Follow her on Twitter @HealyBeth.