Finra fines Park Avenue Securities $300,000 over variable annuity sales

Also censures firm, which agrees to review its supervision practices

Apr 11, 2018 @ 4:22 pm

By InvestmentNews

The Financial Industry Regulatory Authority Inc. has censured Park Avenue Securities and fined the firm $300,000 for problems in its supervision of variable annuity sales.

In a letter of acceptance, waiver and consent, Finra said that from Jan. 1, 2013 through March 3, 2015, Park Avenue "failed to establish, maintain and enforce a supervisory system and written supervisory procedures reasonably designed to ensure that representatives' recommendations concerning multi-share class variable annuities" where compliant.

During that period, Park Avenue sold approximately 12,732 variable annuity contracts, of which almost 2,600, or roughly 20%, were L-share contracts that had shorter surrender periods and carried fees typically between 35 and 50 basis points higher annually than those of the most commonly sold B-share contracts.

Finra said Park Avenue did not provide training to its brokers on the features of the various share classes and the associated fees and surrender charges, and did not provide them with adequate information to compare share classes to make suitability determinations. In addition, Park Avenue had no surveillance procedures to determine if any of its representatives had potentially inappropriate rates of variable annuity exchanges.

In signing the letter, Park Avenue Securities agreed to produce a written certification within 90 days saying that it had completed a review of its applicable systems and procedures for reviewing VA sales.

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