Finra whacks Advisor Group, NPH with $2.7 million in fines over variable annuity sales

Eight broker-dealers censured for supervisory laxity in monitoring VA exchanges

Jul 25, 2018 @ 12:23 pm

By InvestmentNews

The Financial Industry Regulatory Authority Inc. has censured four broker-dealers of Advisor Group and four National Planning B-Ds for poor supervision of variable annuity exchanges, fining them a total of almost $2.7 million.

The individual broker-dealers — the Advisor Group's Royal Alliance Associates, FSC Securities Corp., SagePoint Financial and Woodbury Financial Services, as well as NPH's National Planning Corp., Investment Centers of America, SII Investments and IFC Holdings (known as Invest Financial) — all agreed to improve their VA sales supervision as part of their acceptance, waiver and consent.

The following fines were imposed on the Advisor Group firms: Royal Alliance, $350,000; FSC, $200,000; SagePoint, $200,000; and Woodbury, $250,000.

The fines on the National Planning Corp. firms, which are now part of LPL Financial, were: NPC, $650,000; ICA, $115,000; SII, $325,000; and IFC, $600,000.

Essentially, Finra alleges that the firms were lax in monitoring the sales and exchanges of variable annuities and did not address suitability issues regarding fees and costs of different VA share classes.

None of the firms' procedures addressed the suitability concerns raised by the sale of more expensive and short-term oriented L-share contracts when combined with a long-term rider or sales to customers with a long-term investment time horizon, Finra said.

(More: Finra cracks down on faulty variable annuity exchanges)


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