Insurance BD to Pay $25 Million to Settle VA Sales Misreps
A large insurance-affiliated broker-dealer agreed to pay $25 Million in fines and restitution in connection with variable annuity replacement transactions, which includes the largest fine ever imposed relating to variable annuities. FINRA asserts that, over a 5-year period, the respondent misrepresented material facts about expenses, features, and death benefits in 72% of replacement transactions. FINRA also avers that the firm’s principals approved 99.79% of VA replacement applications even though nearly three quarters contained materially inaccurate information. FINRA also faults the firm for failing to adequately train its registered reps.
OUR TAKE: The regulators will shine a very bright light on sales of complex investment products that enrich the registered rep and the firm. The DoL has already promulgated its version of a fiduciary duty. Will the SEC and FINRA be far behind?