Folks who refinance their homes or take out home equity loans in order to purchase securities are risking too much financially, according to the Financial Industry Regulatory Authority (FINRA), the largest regulator of securities firms in the U.S.

"[Americans] should not be putting that asset at risk to buy securities," said Susan Merrill, the Executive Vice President and Chief of Enforcement of FINRA, in a statement.

Case in point: a $60,000 fine and nine month suspension of Nancy Ziering, a New Jersey-based broker for Ameritas Investment Corp. (which was fined $100,000), that FINRA handed down this month.

Ziering was found to have induced 90 clients into investment strategies and investment vehicles that were deemed inappropriate for how they were pitched, which was to fund college and retirement.

According to FINRA, Ziering used a separate college-planning business, Madison Financial Aid Consultants, to pitch more than 220 customers, some of whom were already deep in consumer debt, on variable life insurance policies (VULs). She ultimately sold VULs from Ameritas, who was fined for not adequately supervising Ziering and her recommendations to use the proceeds from mortgage refinancing or home equity loans to invest in VULs.

Both parties, while neither admitting nor denying the charges, consented to FINRA's findings.

Even though VULs can have tax advantages, the investment aspect of the product means that they carry risk and can diminish in value. Also, they include (in this case) large annual premium payments and are relatively illiquid (Ziering's VUL scheme required her customers to adhere to a 20-year plan).

The case highlights the importance of fully understanding the nature of an investment and whether it is appropriate for your financial goals. Those interested in learning more about the risks of investments involving your home are encouraged to seek out FINRA's online resources.

Concerned you may have a broker along the lines of Ziering? FINRA's online BrokerCheck includes the disciplinary history of a broker or brokerage house, for free.

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