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May 30, 2018 by |

Alameda County and California Financial Elder Abuse and Annuity Attorneys: FINRA Enforcement


FINRA Cracking Down on Faulty Annuity Replacements

Cracking Down on Exploitation

The Financial Industry Regulatory Authority (FINRA) is looking closely at brokers guilty of churning their clients’ annuities. The churning (or replacements) resulted in heavy surrender charges, fees, and tax bills for the cheated clients. The California annuity and financial elder abuse attorneys at Evans Law Firm Inc. represent clients who have suffered surrender charges and large tax liabilities as a result of improper annuity replacements or exchanges by commission-driven brokers.  If you or a loved one has been a victim of securities fraud or financial elder abuse, or are headed toward a FINRA arbitration with your broker or financial advisor, call us at the Evans Law Firm at (415) 441-8669, and we can help.  We handle securities fraud and financial elder abuse cases in Alameda County and throughout California.

Replacements and exchanges of variable annuities and whole life insurance policies are often examples of brokers “churning” or “twisting” client accounts and contracts. Since brokers receive commissions only on new sales, in churning the broker induces a client to replace or exchange an existing products for new ones.  The broker then receives a commission on the “sale” of the new or replacement product.  Some replacements qualify as so-called “1035 exchanges” where the IRS does not tax the surrender of the existing policy as long as that policy is exchanged for a similar one and the policyholder does not withdraw cash from the exchange.  A 1035 exchange requires extra paperwork and can result in delays as far as commission payments are concerned and brokers often do not elect 1035 treatment so that their commission is paid sooner.  Instead the agent “conceals” the replacement and the application is treated as a new purchase application.

In two recent enforcement cases[1], FINRA discovered that the clients had been put into new, unsuitable annuities with higher fees, had incurred large surrender charges on surrender of their existing policies, and had incurred tax liabilities because the brokers had not elected 1035 treatment for the exchanges.  FINRA suspended the two brokers responsible and ordered one to disgorge nearly $186,000 in commissions he had been paid on the abusive transactions.  Commissions on annuities and life insurance are always sizeable and are paid up front.  In any insurance purchase you consider remember that it will take a long time for you to earn back your money paid out for commissions.

Contact Us

If you or a loved one has been a victim of securities fraud or financial elder abuse contact California annuity and financial elder abuse attorney Ingrid Evans and the other attorneys at the Evans Law Firm today at (415) 441-8669, or by email at <a href=””></a>. Our attorneys have experience with complex securities cases, FINRA arbitrations, and mediations; and complicated financial contracts and large insurance companies.  We can help guide your case through a jury trial, FINRA arbitration, or toward an equitable settlement.  We also handle cases involving physical and financial elder abuse, other types of qui tam and whistleblower cases, nursing home abuse, whole life insurance and universal life insurance, and indexed, variable, and fixed annuities.

Some of the leading providers of life insurance and annuities in California are listed below. We are not in any way suggesting that any of these carriers or distributors has done anything wrong.  Rather, the list is provided solely as a reference for readers.

AIG/American General Life Insurance Company

Allianz Life Insurance Company of North America

American Equity Investment Life Insurance Company

American General Life Insurance Company/AIG

American National Life Insurance Company

Ameriprise Financial/RiverSource Life Insurance Company

Athene Annuity and Life Company

Aviva Life Insurance Company

AXA Equitable Life Insurance Company/AXA US

Bankers Life Insurance and Casualty Company

Brighthouse Financial, Inc./MetLife

Crump Life Insurance Services, Inc.

CUNA Mutual Group/CMFG Life Insurance Company

EquiTrust Life Insurance Company

Fidelity & Guaranty Life Insurance Company

Forethought Life Insurance Company/Global Atlantic Financial Group

Genworth Life Insurance Company

Global Atlantic Financial Group/Forethought Life Insurance Company

Guardian Life Insurance Company

Guggenheim Partners/Security Benefit Life Insurance Company

ING USA Annuity and Life Insurance Company

Jackson National Life Insurance Company

John Hancock Life Insurance Company

Lincoln Benefit Life Company

Massachusetts Mutual Life Insurance Company

Metlife/Metropolitan Life Insurance Company/Brighthouse Financial, Inc.

Nationwide Life Insurance Company

New York Life Insurance Company

Northwestern Mutual Life Insurance Company

Pacific Life Insurance Company

Principal Financial Group

Prudential Life Insurance Company

Raymond James Insurance Group

RiverSource Life Insurance Company/Ameriprise Financial

Security Benefit Life Insurance Company/Guggenheim Partners

Symetra Life Insurance Company

Transamerica Life Insurance Company

Unum Life Insurance Company of America

Voya/Reliastar Life Insurance Company

[1] Evans Law Firm, Inc. was not involved in either case.

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