Cuso Financial Services is facing a lawsuit from a credit union customer who claims a former Cuso advisor sold her products involving another former Cuso advisor who had been barred from the industry, according to the law firm representing the customer.
The suit, filed in Texas last month, alleges that Eric Olin Shanks — who was registered with Cuso from 2004 to 2014 — engaged in the practice of selling away, steering the client to invest in a product called “Aurora,” which involved former Cuso advisor Conrad Bautista, according to a press release from Vernon Litigation Group, the law firm for the claimant.
Finra barred Bautista back in May 2013 for refusing to provide supplementary information in the industry self-regulator’s investigation into whether he engaged in fraud, had been involved in outside business activities, borrowed money from clients and failed to disclose a tax lien, according to BrokerCheck.
Cuso discharged Shanks in April 2014 over allegations that he had failed to disclose the surrender of a fixed annuity to fund the purchase of a variable annuity, according to his BrokerCheck profile.
Shanks never registered with another firm, but has had four customer disputes filed against him since then, including one last March that claims he “and/or another representative, Conrad Bautista, sold unapproved investments to client away from firm beginning in 2012 and through 2014,” according to BrokerCheck. That suit sought $447,000 but was settled for $67,250, Finra says.
Vernon Litigation’s suit against Cuso alleges breach of fiduciary duty, supervisory failures and negligence and seeks in excess of $500,000 in damages, Vernon Litigation says. Furthermore, the law firm says that it’s “troubled by the affiliation of many credit unions with independent broker dealers who heavily push high commission investment products” and has been trying to educate the public about the practice through a series of articles and videos.