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 contact Richard Frankowski at 888-741-7503 to discuss your potential legal remedies or complete the contact form.