Finra whacks mid-sized NJ broker-dealer with $325,000 fine over variable annuity sales

Summit Equities sold 1,037 individual variable annuity contracts to its customers during the time period cited by Finra

May 2, 2017 @ 12:32 pm

By Bruce Kelly

The Financial Industry Regulatory Authority Inc. on Monday said it had fined a New Jersey broker-dealer, Summit Equities Inc., $325,000 for failing to supervise brokers' sales of multi-share class variable annuities to clients.

From October 2011 to December 2015, Summit Equities failed to reasonably supervise advisers' recommendations of the variable annuities; the firm also failed to provide training to its registered representatives and principals on the sale and supervision of multi-share class variable annuities, according to the Finra settlement. The company also failed to reasonably supervise the private securities transactions of one undisclosed registered rep from 2001 to 2012, according to Finra.

Summit Equities CEO Steven Weinman did not return phone calls Tuesday morning for comment.

The firm maintains its headquarters in Parsippany, N.J. and employs approximately 132 registered persons, according to Finra.

During the period cited by Finra, Summit Equities sold 1,037 individual variable annuity contracts to its customers, according to Finra. About 45% of those contracts were L-share contracts.

L-share contracts typically provide a shorter surrender period than B-shares, and the fees assessed for L-shares are typically 35 to 50 basis points higher annually than most B-share contracts, according to Finra.

"Despite the significant roles that VA sales played in Summit Equities' overall business, the firm failed to implement a supervisory system and procedures designed to reasonably ensure the suitability of its multi-share class VA sales, including its sale of L-share contracts," according to Finra.

Sales of L-share variable annuities appear to be on the decline. Indeed, the specter of the Department of Labor's fiduciary rule for retirement accounts is hastening the demise of L-share variable annuities. Insurance companies last year quickened the pace of shuttering such variable annuity products as demand dried up.

0
Comments

What do you think?

View comments

Recommended for you

Featured video

INTV

FPA's Shannon Pike: What's next for the financial advisory profession?

As we head toward 2019 and beyond, regulation and compensation will continue to dominate the headlines. Shannon Pike of the FPA explains.

Latest news & opinion

LPL rolls back recruiting policy aimed at driving more assets to its corporate RIA

LPL erases $50 million hurdle for new advisers to join so-called hybrid firms.

Don't be fooled by the numbers — the industry is in a dangerously vulnerable state

Last year's stock market gains helped advisers turn in solid growth in assets and revenue, but that growth could disappear in the next market downturn.

Divided we stand: How financial advisers view President Trump

InvestmentNews poll finds 49.2% approve of his performance, while 46.7% disapprove. How has that changed over the course of his presidency?

10 states with the most college student debt

Residents of these states have the most student debt when you consider their job opportunities.

Ex-Wells Fargo brokers sue for damages, claiming they lost business in wake of scandals

In a Finra arbitration complaint, two brokers allege that Wells Fargo's problems damaged their business.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print