Finra on to B-Ds that sold VAs with hedge funds

By Bruce Kelly

Dec 9, 2012 @ 12:01 am (Updated 5:46 pm) EST

Finra is investigating half a dozen independent broker-dealers that sold variable annuities with subaccounts invested in hedge funds, resulting in $18 million in client losses during the credit crisis.

H. Naill Falls Jr., a plaintiff's attorney suing the broker-dealers, said that the Financial Industry Regulatory Authority Inc. contacted him a year ago about the sale of the product, a variable annuity issued by Sun Life Financial Inc.

The two hedge funds were the Foresee Strategies Insurance Fund and the Foresee Strategies 3(c)(1) Insurance Fund LP, which were related to a group called the SALI Multi-Series Fund LP, Mr. Falls said.

Finra is investigating half a dozen independent broker-dealers that sold variable annuities with subaccounts invested in hedge funds, resulting in $18 million in client losses during the credit crisis.

H. Naill Falls Jr., a plaintiff's attorney suing the broker-dealers, said that the Financial Industry Regulatory Authority Inc. contacted him a year ago about the sale of the product, a variable annuity issued by Sun Life Financial Inc.

The two hedge funds were the Foresee Strategies Insurance Fund and the Foresee Strategies 3(c)(1) Insurance Fund LP, which were related to a group called the SALI Multi-Series Fund LP, Mr. Falls said.

B-D SHUTS DOWN

The broker-dealers that have faced Finra arbitration complaints from investors regarding the Sun Life annuities include FSC Securities Corp., Geneos Wealth Management Inc., Lincoln Financial Network, National Planning Corp. and SagePoint Financial Inc., Mr. Falls said.

Another broker-dealer that sold the product has shut down.

Finra spokeswoman Michelle Ong said that the industry's self-regulator does not confirm investigations.

Tom Nieman, chief financial officer of SALI Fund Services, declined to comment.

A Finra arbitration panel issued a $284,000 award last month to a SagePoint client who filed a claim against the firm last year alleging unsuitability, common-law fraud, breach of fiduciary duty and negligence.

“We had one adviser with one case and settled that six months ago,” said Russ Diachok, chief executive of Geneos, adding that he could not comment further.

Linda Skolnick, a spokeswoman for FSC and SagePoint, didn't return calls seeking comment.

Neither Lincoln Financial spokes-man Charlie Sahner nor Sun Life spokesman Tim Sone would comment.

Melissa Hernandez, spokeswoman for National Planning, said that the company doesn't comment on pending litigation.

bkelly@investmentnews.com Twitter: @bdnewsguy

  @IN Wire

Apr 24 03:22PM
I'm really beginning to hate these bandits. | Runner Says 4 Others Bandited W/Her Number at Boston via @RunnersWorld http://t.co/3Bsxw3YDaX
Apr 24 03:21PM
70 calls, 112 emails. That's what TD Ameritrade says its heard from customers on high-frequency trading http://t.co/4uFF6f289b #HFT

Career Center

Explore your opportunities and be informed for your next move.

Company Type
Firm Type
Clearing Firm
Presented by

Most Watched Video

7:12The 2 biggest factors driving growth in active ETFs

Ugo W. Egbunike Dir. Of Business Development, ETF.com Greg Crawford Deputy Editor, InvestmentNews

Video Spotlight
1:47People are Living Longer. Good News or Bad News?

Sponsored by Oppenheimer Funds Inc.