Subscribe to our mailing list

* indicates required







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.




Regulatory Sanctions

Variable Annuities Supervision: Failing to Go ‘The Whole Nine Yards’

April 23, 2019

[Poster: The Whole Nine Yards /]



by Howard Haykin


On February 27, 2017, during his review of 4 variable annuity exchange applications for 2 customers, a home office principal (“supervisor”) for World Equity Group (“WEG”) noted some errors or ambiguities on disclosure forms relating to the fees. He returned the paperwork to the broker for corrections. So far, so good.



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.


By approving the transactions despite knowing that the disclosure forms had been altered after the customers had signed them, the supervisor failed to supervise these transactions in a manner that was reasonably designed to achieve compliance with FINRA Rule 2330, and failed to adhere to WEG's written supervisory procedures.
To settle FINRA’s charges, the supervisor agreed to pay a $5K fine and to not serve in a principal capacity for 30 days.



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.