MI-based H&R Block Financial Advisors, nka Ameriprise Financial Services, agreed to pay a $175K fine to settle FINRA charges that, through a former RR, it executed unsuitable VA contract replacements or “switches” - i.e., benefits to the firm customers did not outweigh the substantial costs they incurred selling their old VAs and the significant disadvantages to them in purchasing the new VAs.  In these replacements, customers paid over $240,000 in surrender charges, while the firm earned over $215,000 in gross commissions. 

FINRA also noted that H&R Block failed to retain some transaction detail reports, containing information posted into a firm order-entry system by RRs.  The firm required RRs who sold VA contracts to complete an annuity suitability review form in which he or she:  (i) identified funding method for the VA purchase;  (Ii) indicated whether there would be a planned distribution of assets that would trigger a CDSC (contingent deferred sales charge);  and, (iii) responded whether the customer in question was older than 70 years of age.  All fine and good, but the firm failed to retain annuity suitability review forms in connection with the same customer transactions.   [FINRA September Disciplinary Actions, Case #2007009442501].

[C-I Note:  Perhaps if we had all the facts, we'd be more comfortable.  But we don't, so we question the logic or fairness of the disciplinary actions in this matter.

• To what extent did FINRA discipline the RR?
• Did FINRA order RR to pay restitution to aggrieved customers?
• What about safeguards?  If this RR refuses to pay, and he or she terminates all registrations and walks away from the industry, who will compensate customers?  Nothing in the FINRA release mentions restitution by the firm.
• If firm earned $215K in gross commissions, why was it fined "only" $175K?
• What about supervision - does the fact that reports were not retained indicate that reviews were not conducted?
• Was firm and/or supervisory personnel not aware of the $240K in surrender fees?  It's a relatively significant figure.]

Experienced a temporary brain freeze - we know there's got to be many other key points.  How about sharing your questions-concerns-angles in this case?