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Nov 29, 2017 by |

Santa Clara 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 who churn their clients’ variable annuities. Recently, FINRA announced disciplinary measures against two brokers who churned client annuities.  The churns (or replacements) resulted in heavy surrender charges, fees, and tax bills for the cheated clients. The Santa Clara County and 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, contact Santa Clara County and California annuity lawyer Ingrid Evans and the other attorneys at the Evans Law Firm at (415) 441-8669, and we can help.  We handle securities fraud and financial elder abuse cases in Santa Clara County and throughout California.

Replacements and exchanges of variable annuities and whole life insurance policies are often examples of brokers “churning” client accounts. Since brokers receive commissions only on new sales, in a churn 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, 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 Santa Clara County and 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 issuers of annuities in California include:

Allianz Life Insurance Company of North America

American General Life Insurance Company

American Equity Investment Life Holding Company

AXA Equitable Life Insurance

Bankers Life Insurance and Casualty company

EquiTrust Life Insurance Company

Fidelity & Guaranty Life Insurance Company

Forethought Life Insurance Company

Genworth Life Insurance Company

ING USA Annuity and Life Insurance Company

 Jackson National Life Insurance Company

John Hancock Life Insurance Company

Lincoln Financial Group/Lincoln National Life Insurance Company

MaaMutual/Massachusetts Mutual Life Insurance Company

Metlife/Metropolitan Life Insurance Company

Pacific Life Insurance Company

Prudential Life Insurance Company

Security Benefit/Security Benefit Life Insurance Company

Transamerica Life Insurance Company

Voya/ReliaStar Life Insurance Company

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"We contacted Evans Law Firm when we were unable to collect on a Long-Term Life Insurance policy for an elderly family member. Ingrid responded almost immediately with an offer of a free consultation. I was immediately impressed with her passion for justice!!"
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