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Mar 20, 2018 by |

Marin 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 the independent authority that governs the nation’s financial industry, including the sale of annuities to American consumers. Lately, FINRA has begun to look closely at brokers who churn their clients’ annuities, that is, who convince their customers to replace their annuities for no real reason other than that the replacement (or churn, twist, or switch as such transactions are also called) generates a commission for the agent.  Senior consumers are particularly vulnerable to this illegal tactic.

The Marin County and California financial elder abuse and annuity attorneys at Evans Law Firm, Inc. represent clients who have suffered losses as a result of improper annuity replacements or exchanges recommended by commission-driven brokers. Losses may include surrender charges, other penalties or fees, and tax liabilities.  If you or a loved one is over age 60, lives in California, and 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 the attorneys at the Evans Law Firm at (415) 441-8669, and we can help.  We handle securities and annuities fraud and financial elder abuse cases in California.

Since brokers receive commissions only on new sales, in a churn the broker induces a client to replace or exchange 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 earned 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 is a California resident over age 60 and has been a victim of securities fraud or financial elder abuse contact Marin 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 major annuity and life insurance providers in California are listed below. We do not suggest that these carriers have done anything wrong or issued you an unsuitable annuity.  Rather, the list is provided solely for our readers’ convenience.

Allianz Life Insurance Company of North America

American Equity Investment Life Holding Company

American General Life Insurance Company

Ameriprise Financial/RiverSource Life Insurance Company

Athene Annuity and Life Company

AXA Equitable Life Insurance Company

Brighthouse Life Insurance Company

Fidelity & Guaranty Life Insurance Company

Forethought Life Insurance Company

Great American Life Insurance Company

Guggenheim Partners/ Security Benefit Life Insurance Company

Jackson National Life Insurance Company

Life Insurance Company of the SouthWest/National Life Group

Lincoln Financial Group/The Lincoln National Life Insurance Company

MassMutual/Massachusetts Life Insurance Company

Midland National Life Insurance Company

National Life Group/Life Insurance Company of the SouthWest

New York Life Insurance Company

North American Company for Life and Health Insurance

Pacific Life Insurance Company

Principal Life Insurance Company

Prudential Life Insurance Company

RiverSource Life Insurance Company/Ameriprise Financial

Security Benefit Life Insurance Company/Guggenheim Partners

Symetra Life Insurance Company

Transamerica Life Insurance Company

Voya/Reliastar Life Insurance Company

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

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