BROWSE BY TOPIC
- Bad Brokers
- Compliance Concepts
- Investor Protection
- Investments - Unsuitable
- Investments - Strategies
- Wall Street News
- Investments - Private
- Rules & Regulations
- Bad Advisors
- Boiler Rooms
- Terminations/Cost Cutting
- General News
- Donald Trump & Co.
- Regulatory Sanctions
- Big Banks
Stories of Interest
- Sarah ten Siethoff is New Associate Director of SEC Investment Management Rulemaking Office
- Catherine Keating Appointed CEO of BNY Mellon Wealth Management
- Credit Suisse to Pay $47Mn to Resolve DOJ Asia Probe
- SEC Chair Clayton Goes 'Hat in Hand' Before Congress on 2019 Budget Request
- SEC's Opening Remarks to the Elder Justice Coordinating Council
- Massachusetts Jury Convicts CA Attorney of Securities Fraud
- Deutsche Bank Says 3 Senior Investment Bankers to Leave Firm
- World’s Biggest Hedge Fund Reportedly ‘Bearish On Financial Assets’
- SEC Fines Constant Contact, Popular Email Marketer, for Overstating Subscriber Numbers
- SocGen Agrees to Pay $1.3 Billion to End Libya, Libor Probes
- Cryptocurrency Exchange Bitfinex Briefly Halts Trading After Cyber Attack
- SEC Names Valerie Szczepanik Senior Advisor for Digital Assets and Innovation
- SEC Modernizes Delivery of Fund Reports, Seeks Public Feedback on Improving Fund Disclosure
- NYSE Says SEC Plan to Limit Exchange Rebates Would Hurt Investors
- Deutsche Bank faces another challenge with Fed stress test
- Former JPMorgan Broker Files racial discrimination suit against company
- $3.3Mn Winning Bid for Lunch with Warren Buffett
- Julie Erhardt is SEC's New Acting Chief Risk Officer
- Chyhe Becker is SEC's New Acting Chief Economist, Acting Director of Economic and Risk Analysis Division
- Getting a Handle on Virtual Currencies - FINRA
We seek to provide information, insights and direction that may enable the Financial Community to effectively and efficiently operate in a regulatory risk-free environment by curating content from all over the web.
Stay Informed with the latest fanancialish news.
NEWSLETTERS & ALERTS
FINRA Nabs Fifth Third Securities on Variable Annuity Exchanges
Fifth Third Securities agreed to pay $6 million in fines and restitution to customers to settle FINRA charges that it failed once again to appropriately consider the costs and benefits – as well as the suitability - of variable annuity exchanges. This is the firm’s second significant sanction involving the sales of variable annuities.
Variable annuities (“VA’s”) are complex investments commonly marketed and sold to retirees or people saving for retirement. Exchanging one VA with another involves a comparison of the complex features of each security. Accordingly, VA exchanges are subject to regulatory requirements to ensure that brokers have a reasonable basis to recommend them, and their supervisors have a reasonable basis to approve the sales.
WHERE DID FIFTH THIRD GO WRONG? From 2013 through 2015, Fifth Third Securities misstated the costs and benefits of exchanges, making the exchange appear more beneficial to the customer. A sample of VA exchanges transacted during the period revealed that Fifth Third misstated or omitted at least one material fact relating to the costs or benefits in some 77% of VA exchanges. During that time, firm principals ultimately approved about 92% of VA exchange applications submitted to them for review.
Fifth Third’s violative conduct was due in large part to its: (i) failure to ensure that registered reps (“RRs”) obtained and assessed accurate information concerning the recommended VA exchanges; and, (ii) failure to adequately train RRs and principals on how to conduct a comparative analysis of the material features of the VAs.
FAILURE TO COMPLY WITH EARLIER SETTLEMENT. In 2009, Fifth Third settled FINRA charges that, from 2004 to 2006, it had effected 250 unsuitable VA exchanges and transactions and had inadequate systems and procedures governing its VA exchange business. Yet, more than 4 years following that settlement, the firm once again failed to fully implement an independent consultant’s recommendation that it develop certain surveillance procedures to monitor VA exchanges by individual RRs.
[For details on this case, go to ... FINRA Disciplinary Actions Online, and refer to Case #2013035051401.