According to reports, Transamerica Financial Advisors has agreed to pay $8.8 million in sanctions for unsuitable sales of variable annuities, mutual funds and 529 college savings, Finra announced Monday.
Transamerica’s settlement with the Financial Industry Regulatory Authority Inc. purportedly includes a $4.4 million fine and $4.4 million in restitution to approximately 2,400 customers. FINRA reportedly charged Transamerica with failing to adequately supervise its registered representatives in making recommendations involving the three products for various time periods from 2009 through 2016.
From May 2010 to May 2016, the firm purportedly sold approximately 51,000 variable annuity policies, generating $591 million in commissions — or more than 40% of Transamerica’s revenue.
But the firm allegedly failed to detect at least one misstatement by its reps regarding more than half of the 3,781 variable annuity exchanges it approved. That resulted in customers swapping the VAs they were holding for new ones. The transaction generated commissions but harmed the customer.
Finra also alleged Transamerica failed to detect when its reps recommended inappropriate high-fee variable annuity share classes.
From January 2009 to November 2015, Transamerica allegedly did not supervise mutual fund sales adequately, resulting in the firm’s reps failing to apply approximately $438,239 in available waivers to customers.
The third prong of the settlement involved sales of 529 college savings plans. FINRA alleged that from May 2010 through May 2015 the firms reps recommended unsuitable 529 share classes because they failed to take into account the age of beneficiaries and the number of years until expected withdrawals
Transamerica, which did not admit nor deny the charges, has gone on the record stating that it has corrected the problems FINRA cited.
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