SEC Alert: Stories From The Front Line
Major Red Flag: Spectacular Returns and “Guarantees”
Seek Help If You Have Been Defrauded
One significant forms of financial elder abuse is the sale to seniors of unsuitable insurance products. These products, such as deferred annuities and some unsuitable life insurance policies, generate sizeable commissions for agents but may result in serious economic harm for seniors. The U.S. Securities and Exchange Commission (SEC) and Financial Industry Regulatory Authority (FINRA) are aware of the possibility of harm to seniors from these products and have issued a joint alert to warn seniors of the potential dangers of certain products and share instances from actual cases of harm to elderly investors. We encourage you to read the alert if you have been approached with annuities or other insurance products recently or some other investment promising a high return. These are volatile times in U.S. markets and agents seize on market anxiety in sales approaches. If you are over 60, live in Napa or elsewhere in California and have experienced an economic loss as a result of the sale of an unsuitable annuity or other investment product, call us today at 415-441-8669 (or toll free at 1-888-50EVANS) for a free review of your policy.
Unsuitable Annuities and “High Return” or “Risk-Free” Investments
The SEC and FINRA recently shared some examples of cases involving unsuitable annuities or other investments sold to seniors and the list of examples is useful in spotting some common red flags and common denominators in these cases of financial elder abuse or fraud:
- FINRA barred an investment adviser from association with any FINRA-regulated securities firm and ordered the adviser to pay more than $1.5 million in restitution to seniors and other customers for unsuitable sales of annuities and mutual funds totaling over $6 million.
- FINRA fined a financial services firm, $2.75 million for failing to maintain an adequate supervisory system to oversee the annuity sales activities of over 1,000 branch managers. working in offices throughout the United States. In a related action, FINRA permanently barred one of those branch managers because the manager recommended unsuitable variable annuity products to seniors and made misleading statements to customers in correspondence.
- FINRA fined an investment services firm, $850,000 for supervisory, recordkeeping, telemarketing, and other violations. The firm had failed to implement proper procedures for selling annuities to seniors.
- The SEC obtained a $112 million judgment against investment advisers who induced at least 803 seniors to invest in notes that purportedly paid a “guaranteed” return of 5.5% to 8% per year. The fraudsters claimed that investor funds would be used to make secured loans to businesses and that investors would be repaid their principal at maturity, but these representations were false.
- State regulators sued two insurance agents who convinced clients to liquidate annuity investments and invest in a bogus real estate company by promising returns of up to 9%.
Avoiding Fraud and Financial Elder Abuse
Unscrupulous agents or financial advisors are particularly successful in preying on older investors who do not have someone to discuss business matters with before they make a decision. The results can be disastrous financially. Some investments may be entirely fraudulent as in Ponzi schemes. Other investments may be entirely unsuitable for the senior consumer and extremely expensive to get out of as is the case with deferred annuities. Any of these investments may also result in tax liabilities. If you are a senior, always get a second opinion on any investment proposal from a professional with nothing to gain from a sale. Also always consult your tax advisor before making any purchase or exchanging, surrendering or withdrawing from any annuity. All annuity transactions have tax consequences.
Ingrid M. Evans and Evans Law Firm represent seniors who have been sold an unsuitable annuity, or where the agent has sold a senior on a replacement or exchange that has resulted in a loss. If you are over age 60 and have lost money as the result of a deferred annuity transaction or surrender in Napa County or elsewhere in California, you can reach Ingrid at (415) 441-8669 (or toll free at 1-888-50EVANS) or by email at <ahref=”mailto:email@example.com”>firstname.lastname@example.org</a>..
Some significant issuers and distributors of fixed, variable and fixed indexed deferred annuities in California are listed below. We are not in any way suggesting that any of these carriers or distributors has done anything wrong. The list is provided solely as a reference for our 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 International Group, Inc. (AIG)
American National Life Insurance Company
Athene Annuity & Life Assurance Company
Athene Annuity and Life Company
Aviva Life Insurance Company
AXA Equitable Financial Services, LLC
AXA Equitable Life Insurance Company/AXA US
AXA Advisors, LLC
Brighthouse Financial, Inc./MetLife
EquiTrust Life Insurance Company
Fidelity & Guaranty Life Insurance Company
Genworth Financial, Inc.
Genworth Life and Annuity Insurance Company
Genworth Life Insurance Company
Guggenheim Partners, LLC
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
Lincoln Financial Group
Massachusetts Mutual Life Insurance Company
Metlife/Metropolitan Life Insurance Company/Brighthouse Financial, Inc.
Minnesota Life Insurance Company
Nationwide Investor Services Corporation (NISC)
Nationwide Life and Annuity Insurance Company
Nationwide Life Insurance Company
New York Life Insurance Company
Northwestern Mutual Investment Services, LLC
Northwestern Mutual Life Insurance Company
Northwestern Mutual Wealth Management Company
Pacific Life & Annuity Company
Pacific Life Insurance Company
Security Benefit Corporation
Security Benefit Group, Inc.
Security Benefit Life Insurance Company/Guggenheim Partners
Security Investors, LLC
Security of Denver Life Insurance Company/Voya
Transamerica Life Insurance Company
Voya Financial Advisors
Voya/Reliastar Life Insurance Company
World Financial Group Insurance Agency, Inc.
 We encourage you to read the SEC/FINRA Alert here to learn more: Investment Products and Sales Practices Commonly Used to Defraud Seniors: Stories from the Front Line (sec.gov). Evans Law Firm, Inc. was not involved in any of the reported examples.