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NEWSLETTERS & ALERTS
Variable Annuities Supervision: Failing to Go ‘The Whole Nine Yards’
[Poster: The Whole Nine Yards / PSIMovie.com]
by Howard Haykin
WHAT WENT WRONG. The broker or his secretary whited-out the erroneous or ambiguous information, wrote new information over the whited-out sections, and then returned the forms to the supervisor for his re-review and approval. The additional information that was written on the whited-out portions of the forms made the forms more accurate.
On March 2, the supervisor approved the 4 variable annuity exchange transactions knowing that the disclosure forms had been altered after the customers had signed them. Furthermore, he approved the transactions even though he ...
- knew the altered forms were never provided to the customers for their review or signatures; and,
- knew, or should have known, the customers were not even notified of the changes.
Approximately one year later, the customers were notified of the errors in the paperwork that they had signed. The customers were not harmed by the transactions, and they expressed satisfaction with the transactions despite the erroneous disclosure documents.
This case was reported in FINRA Disciplinary Actions for April 2019.
For further details, go to ... FINRA Disciplinary Actions Online, and refer to Case #2017052426601.