Two executives at FTC Capital Markets Inc. in New York have been charged in an alleged scheme to defraud institutional investors by misrepresenting the types of securities they were investing in.

Guillermo Clamens, FTC Capital’s chairman, and Nazly Cucunuba Lopez, also known as Lina Lopez, have been criminally charged with conspiracy, securities fraud and wire fraud. Clamens also was the company’s chief executive prior to March 2009.

Tax-free benefits reportedly used to pay bonuses, deferred pay and pensions.

Major financial institutions — including Bank of America (BAC, Fortune 500), J.P. Morgan Chase (JPM, Fortune 500), Wachovia and its parent, Wells Fargo (WFC, Fortune 500) — are taking increasing amounts of life insurance policies against their employees, and naming the company as the beneficiary, the Wall Street Journal reported.

The company receives a tax-free benefit when the employee dies, whether that employee is still working at the company or not, the report said.

While banks are not alone in the practice, the amount of life insurance that banks in particular are taking out for their employees has been on the rise, the paper reported.

A law passed in August 2006 prohibits banks from taking out life insurance policies against all but the top third of their earners, and those employees must provide consent to participate in the program, according to the story.

But the Journal said the regulation does not apply to the policies taken out against millions of current and former employees prior to 2006.