FINRA hit Valic Financial Advisors (VFA) with a whopping $1.75 million fine for a several conflicts of interest having to do with the way it compensated brokers selling annuities.
FINRA reported that Valic Financial Advisors failed to have a reasonable system to address and review the conflict of interest created by its compensation policy, according to the Letter of Acceptance, Waiver and Consent (AWC).
FINRA specifically cited instances when the broker-dealer’s clients chose to move assets out of Valic variable annuities to other in-house products, including Valic indexed annuities, as reason for the fine.
“From October 2011 through October 2014, VFA created a conflict of interest by providing registered representatives a financial incentive to recommend that customers move their funds from Valic variable annuities to the firm’s fee-based platform or into a Valic fixed index annuity,” according to the document. “VFA further incentivized the conflict by prohibiting its registered representatives from receiving compensation when moving customer funds from a Valic VA to non-Valic VAs, mutual funds or other non-Valic products.”
VFA, which has about 1,350 advisers, is a subsidiary of American International Group, Inc., (AIG), an insurance corporation that specializes in tax-qualified retirement plans, supplemental tax-deferred and after-tax investments.
The foregoing information, which is all publicly available, is being provided by The White Law Group. The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Franklin, Tennessee.
For more information on the firm and it’s representation of investors, visit www.whitesecuritieslaw.com.
For a free consultation with a securities attorney, please call (888) 637-5510.