Kestra Investment Services, Inc., headquartered in Austin, Texas, submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Financial Industry Regulatory Authority (FINRA) for failing to adequately supervise the sales of variable annuities, specifically L-share variable annuities.
Registered with FINRA since 1997, Kestra Investment Services currently has 1,845 registered representatives and 639 branch offices. FINRA found that from October 1, 2013 to June 30, 2014, Kestra Investment Services failed to establish, maintain, and enforce an adequate supervisory system to identify red flags related to the sale of L-share variable annuities. Further, FINRA found that Kestra Investment Services failed to provide its registered representatives with proper training and guidance on suitability considerations for these variable annuities. According to FINRA, the L-share annuities are a complex investment product that is only suitable for a narrow class of investors and that Kestra Investment Services allegedly failed to provide its registered representatives with appropriate guidance to discern this class of investor.
FINRA found that during the relevant time period, Kestra Investment Services sold 1,873 variable annuity contracts, of which 19%, totaling $52 million, were L-share variable annuity contracts. FINRA alleges that Kestra Investment Services failed to provide sufficient guidance or training to their employees on the sale of L-share contract variable annuities, particularly the combination of L-share contracts with long term income riders. Without admitting or denying the FINRA findings, Kestra Investment Services was ordered to pay a $475,000 fine.
FINRA rules require brokerage firms to establish and implement a reasonable supervisory system to protect customers from the risks associated with investing. The implementation of the rules requires supervisors to monitor their employees to ensure compliance with federal and state securities laws, securities industry rules and regulations, as well as the brokerage firm’s own policies and procedures. If broker-dealers and their supervisors fail to establish and implement these protective measures, they may be held liable to account holders for losses which stem from their employees’ misconduct. Therefore, investors who have suffered losses due to a brokerage firm’s failure to supervise the unsuitable recommendations of its representatives can bring forth claims to recover damages against firms, like Kestra Investment Services, which have a duty to supervise employees in order to protect their customers’ interests.
Have you suffered losses in your Kestra Investment Services account due to an unsuitable variable annuity investment? Did your stockbroker make an unsuitable recommendation that doesn’t fit with your investment goals? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation. Mr. Pearce is accepting clients with valid claims against Kestra Investment Services stockbrokers who may have engaged in misconduct and caused investors losses.
The most important of investors’ rights is the right to be informed! This Investors’ Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 40 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors’ rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.
Robert Wayne Pearce
Robert Wayne Pearce of The Law Offices of Robert Wayne Pearce, P.A. has been a trial attorney for more than 40 years and has helped recover over $125 million dollars for his clients. During that time, he developed a well-respected and highly accomplished legal career representing investors and brokers in disputes with one another and the government and industry regulators. To speak with Attorney Pearce, call (800) 732-2889 or Contact Us online for a FREE INITIAL CONSULTATION with Attorney Pearce about your case.
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