Variable Annuities - Law Offices of Robert Wayne Pearce

Investor Alert – FINRA is Scrutinizing Variable Annuity Sales and You Should Too!

The Financial Industry Regulatory Authority (FINRA) is scrutinizing the sales of variable annuities, noting that they are complex products typically marketed to seniors. This follows a record fine of $25 million FINRA slammed MetLife Securities, Inc. (MetLife) with for negligent misrepresentations and omissions of fact regarding the costs and guarantees relating to variable annuities and variable annuity replacements. At a recent Insured Retirement Institute (IRI) conference, FINRA associate vice president and enforcement chief counsel James Day stated that variable annuities “… are at the sweet spot of complex products marketed to retirees and people about to retire.” Also noted at the IRI conference as a specific area of FINRA’s scrutiny were L-share variable annuities. These products offer increased liquidity and a shorter surrender-penalty period, typically three years rather than seven.

May 11, 2016

FINRA Slams MetLife with $25 Million Fine for Misrepresenting Variable Annuities

The Financial Industry Regulatory Authority (FINRA) slammed MetLife Securities, Inc. (MetLife) with a $25 million fine for negligent misrepresentations and omissions to customers regarding the costs and guarantees relating to variable annuities. MetLife agreed to the fine, which includes a $20 million fine and $5 million to be paid to customers, without admitting or denying FINRA’s findings. From approximately 2009 to 2014, FINRA found that MetLife falsely told customers that new variable annuities were less costly than the annuities they were replacing. Further, MetLife made the replacement annuities appear more beneficial to the customer when they were typically more expensive. According to FINRA, MetLife sold at least 43 billion in variable annuities which generated $152 million in gross dealer commissions for the firm. Nonetheless, MetLife failed to supervise its registered representatives to ensure they were property trained and informed of the comparative analysis between the variable annuities and the recommended replacement annuities. In fact, FINRA found that MetLife principals approved 99.79% of the variable annuity replacements, even though three-quarters (3/4) of the replacement applications contained at least one misrepresentation or omission.