FINRA Sanctions Fifth Third Securities Inc., $4 Million Fine

According to The Financial Industry Regulatory Authority (FINRA), the regulator has fined Fifth Third Securities Inc. $4 million and required the firm to pay approximately $2 million in restitution to customers for variable annuity exchange violations.

FINRA alleges that Fifth Third Securities failed to accurately describe the costs and benefits of variable annuity exchanges, and recommended exchanges without a reasonable basis to believe the exchanges were suitable.

Further, FINRA alleges that Fifth Third’s registered representatives and principals were not adequately trained on how to conduct a comparative analysis of the material features of the variable annuities and often misstated the costs and benefits of exchanges, making the exchange appear more beneficial to the customer.

The regulator reviewed a sample of VA exchanges that the firm approved from 2013 through 2015 and found that Fifth Third allegedly misstated or omitted at least one material fact relating to the costs or benefits of the VA exchange in approximately 77 percent of the sample.

In addition, FINRA found that the firm’s principals purportedly approved approximately 92 percent of VA exchange applications submitted to them for review.

Variable Annuity Exchanges

FINRA issued an investor alert recently to address investors’confusion regarding Variable Annuity Exchanges. Your broker or financial advisor may try to convince you it is a good idea to exchange your annuity contract for a newer model, but keep in mind that brokers tend to earn a large commission for selling annuities ( sometimes as high as 4 – 5%), and it may not be in your best interest to do so.

Even though tax laws could make the variable annuity exchange sound attractive, you may actually be losing by making the exchange.

If you have questions about annuity exchanges or a variable annuity you purchased, or if you believe that you have been the victim of a securities fraud, The White Law Group may be able to help. To speak to a securities attorney, please call our Chicago office at 888-637-5510.

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 Vero Beach, Florida.

To learn more about The White Law Group, visit  www.whitesecuritieslaw.com.