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Valic Financial Advisors Fined $1.75M

Referring to several conflicts of interest regarding how the firm paid brokers selling annuities, FINRA announced that it fined Valic Financial Advisors Inc. $1.75 million. FINRA found that VFA "failed to have a reasonable system to address and review the conflict of interest created by its compensation policy,” the regulator stated. It specifically pointed to occasions when VFA's customers decided to move assets out of variable annuities to other in-house products, including VFA indexed annuities, as causing the fine. “From October 2011 through October 2014, VFA created a conflict of interest by providing registered representatives a financial incentive to recommend that customers move their funds from Valic variable annuities to the firm's fee-based platform or into a Valic fixed index annuity,” FINRA said. “VFA further incentivized the conflict by prohibiting its registered representatives from receiving compensation when moving customer funds from a Valic VA to non-Valic VAs, mutual funds or other non-Valic products.” “During 2012 and 2013, [...]

By |January 2nd, 2017|FINRA, Press Releases & News|
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Indexed Annuities Up, Variable Annuities Down In 2016

Fixed index annuity sales are on pace for a record year in 2016 as low interest rates and product features driver their popularity among broker-dealers and in the face of a potential new Labor Department investment-advice regulation that will make sales of these harder. Simultaneously, sales of variable annuities are projected to be their lowest in nearly two decades, continuing their multi-year dip, according to insurance industry group, Limra. Limra projects indexed annuity sales to hit $62 billion by year-end, which would represent growth of roughly 14% over the record $54.5 billion set in 2015. However, Limra estimates a 21% decrease in variable annuity sales in 2016, to $105 billion from $133 billion last year. That would be the lowest figure since 1998, when variable annuities saw $100 billion in sales. This is due in part as independent broker-dealers, the largest distribution channel for variable annuities, have started to embrace indexed annuities more. One reason [...]

By |November 22nd, 2016|Uncategorized|
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Texas Broker-Dealer Fined Over Variable Annuities

An annuity exchange allows brokers to transfer an investor's funds in an annuity to a new policy without incurring tax penalties. IMS Securities, a small broker-dealer firm, was fined $100,000 by FINRA for failing to supervise their brokers who used the annuity exchange to benefit themselves, according to a recent Investment News article. The brokers at IMS were transferring investor funds to new investments under the annuity exchange, producing many more upfront commissions for themselves at the expense of their customers. IMS had a duty to supervise the brokers and the annuity exchange investments and were fined for failing to do so. The article stated that there are two other pending FINRA complaints against the owner and chief executive officer, as well as the chief financial officers and the compliance officers, over the sale of variable annuities, real estate securities and REIT sales. If you or someone you know has lost money as a result of an investment or broker misconduct, please [...]

By |October 7th, 2016|Uncategorized|
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FINRA Bars Broker Bernard McGee

FINRA barred broker Bernard McGee and ordered him to pay about $250,000 in penalties for fraudulent annuity recommendations he made to an elderly customer. According to FINRA, he surrendered four variable annuity policies owned by the 71 year old customer valued at roughly $500,000 and used the money to purchase a charitable gift annuity from a company that was later discovered to be a fraud. McGee allegedly made material misrepresentations to persuade the client to surrender the variable annuities, which made up approximately fifty percent of her net worth, and buy the charitable gift annuity by misrepresenting to her that she was facing a large tax liability, which the new annuity would offset. McGee also failed to disclose to his client that he would receive a ten percent commission of about $50,000 upon the purchase of the charitable gift annuity from the company 54Freedom, says FINRA. The client incurred about $36,000 in surrender charges. Because of the [...]

By |July 20th, 2016|FINRA, Fraud, Press Releases & News|
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