On Oct. 15, FINRA settled with World Equity for $480k re VA sales.
- Firm was fined $100k and ordered to pay $380k restitution for customers.
- Did not ensure representatives, principals complied with FINRA Rule 2330.
Review of VA Sales
- While firm had registered principals responsible for review and approval of
variable annuity purchase and exchange, primary review and approval was
the responsibility of single principal across all of the firm’s representatives. - The principal had no experience supervising sales of variable annuities and
firm failed to give training or tools to assist review of annuity transactions.
Suitability Issues
- Firm had no procedure to ensure its principals considered suitability issues,
related to share class selection, including sales of L-share contract suitable. - When had long-term rider, or sold to customer with long-term time horizon.
- Firm’s failure to have procedures, was unreasonable given their substantial
volume of variable annuity sales, particularly in L-share contracts from firm. - Due to the firm’s supervisory deficiencies, failed to identify a pattern of red
flags presented by sales of L-share variable annuities, with long-term riders. - To investigate suitability of these potentially incompatible recommendations.
Sanctions
- Required to retain consultant, to conduct review of adequacy of its policies.
- Conduct training re variable annuity transactions, purchases and exchanges.
