Finra fines Securities America $175,000 for failure to supervise variable annuity sales

Finra fines Securities America $175,000 for failure to supervise variable annuity sales
The regulator said the lack of supervision raised concerns that investors were sold more expensive share classes that weren't suitable for them.
SEP 07, 2018

The Financial Industry Regulatory Authority Inc. fined Securities America $175,000 for failing to properly oversee the sale of a certain type of short-term variable annuity product. According to Finra, Securities America brokers violated or overlooked suitability concerns related to the share classes of the variable annuities being sold during the relevant period, between Aug. 4, 2014 and Jan. 28, 2016. During this period, Finra said Securities America sold both B-share VA contracts, the most commonly sold share class, and L-share contracts, which are more expensive because they have relatively short surrender periods. In other words, investors pay a higher fee in exchange for increased liquidity. According to Finra, during the relevant period, Securities America received approximately $53 million from the sale of variable annuities, including approximately $6.6 million from the sale of 1,904 L-share contracts. Finra said the lack of supervision raised suitability concerns as to whether clients should have been sold the more expensive L-shares. Securities America did not respond to a request for comment. Adam Gana, a securities lawyer not affiliated with the case, said the specific class of variable annuities often court suitability abuses because they come with higher commissions. "It's imperative when selling annuities that brokerage firms adequately disclose all the risks, fees and durations of an annuity at a minimum," he said. "I find that firms regularly misrepresent that information. High-commission products become a breeding ground for this type of misconduct."

Latest News

Advisors still have questions on Trump Accounts ahead of July 4 launch
Advisors still have questions on Trump Accounts ahead of July 4 launch

Financial planning leaders say unresolved rules on fees, Roth conversions and financial aid complicate comparisons with 529 plans.

Trust at Scale: How AI Personalization Rewires Business for Growth
Trust at Scale: How AI Personalization Rewires Business for Growth

AI can personalize at scale, but without trust, it falls flat.

Advisor moves: Succession planning, fresh starts trigger exits at Osaic and LPL
Advisor moves: Succession planning, fresh starts trigger exits at Osaic and LPL

Teams head for W-2 independence models with practices totaling almost $1B.

Empower strikes $340m deal to take on Milliman's retirement book
Empower strikes $340m deal to take on Milliman's retirement book

Acquisition adds 400 defined benefit plans and 1.5 million participants, pushing Empower deeper into workplace benefits.

EP Wealth lands fifth deal of 2026 in Silicon Valley
EP Wealth lands fifth deal of 2026 in Silicon Valley

Menlo Park firm brings $900m in AUM and specialist expertise serving Apple and Google employees.

SPONSORED Who builds the income when the pension disappears?

Dan Biagini of American Equity says the steady decline of pensions, longer lifespans and a reset in interest rates are rewriting how advisors build retirement income

SPONSORED Why direct indexing stopped being optional

Direct indexing is on pace to outgrow ETFs and mutual funds. Northern Trust's Ken Lassner explains why the advisors who get it wish they had started sooner.