FINRA Fine $1mn VA Suitability

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.


  • 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.