FINRA sanctions Ameritas Investment Corp. for Supervision Lapses
According to reports, The Financial Industry Regulatory Authority (FINRA) has censured and fined Ameritas Investment Corp. $180,000 for lapses in the supervision of variable annuity sales.
FINRA said that between September 2013 and July 2015, Ameritas “failed to establish, maintain and enforce an adequate supervisory system and written supervisory procedures related to the sale of multi-share class variable annuities.”
In a letter of acceptance, waiver and consent, FINRA said Ameritas sold 4,075 individual Variable Annuity contracts, from which the firm earned over $58 million in revenue.
The firm sold 697 L-share contracts, which totaled 17% of its overall VA sales, or about $11 million.
According to FINRA, L-share contracts typically provide a shorter surrender period, of three to four years, than B-share contracts, which typically have a surrender period of seven years and are the most commonly sold share class in the industry.
Ameritas allegedly did not provide sufficient guidance to its registered representatives on the features of various available share classes. According to FINRA, they did not provide their representatives with adequate information to compare share classes to make suitability determinations.
Variable Annuity Sales
A variable annuity is a contract sold by an insurance company. The contract provides the holder with future payments based on the performance of the contract’s underlying securities. The insurer guarantees a minimum payment, but the rate of return on the underlying securities may vary.
Every time a broker sells a variable annuity, they received a larger than average commission for the sale, which is anywhere from 3-7%. Essentially, brokers are salesmen and women that primarily work for commissions, who may not necessarily have their client’s best interest in mind. A determination needs to be made if this investment is financially right for the client or for the broker. The Insurer of the annuity makes their money on annuity fees and management services.
The White Law Group is investigating potential FINRA arbitration claims involving Ameritas’ sales of variable annuities. If you believe Ameritas misrepresented the features of a variable annuity sold to you and would like to discuss your litigation options, please call the firm at 888-637-5510 for a free consultation.
This information is publicly available on FINRA’s website.
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, visit https://www.whitesecuritieslaw.com.