On Sep. 17, FINRA fined four firms $1mn re VA suitability issues.
- FSC Securities Corporations, fined $200k, Royal Alliance Associates fined $350k.
- SagePoint Financial, fined $200k and Woodbury Financial Services, fined $250k.
Failures
- Procedures did not specifically address the suitability issues related to different
surrender periods, fees and costs of the different variable annuity share classes. - Suitability concerns raised from sale of an L-share contract when combined with
long-term income rider or to customer with long-term investment time horizon. - FSC, SagePoint and Royal Alliance procedures only explained basic differences.
- Woodbury’s procedures failed to address variable annuity share classes at all.
- There was inadequate training to ensure the understanding of variable annuities.
- Royal selected for review a limited number of representatives on ad hoc criteria.
