FINRA Settlement Includes Restitution to More than 2,400 Customers
In an agreement reached with the Financial Industry Regulatory Authority (FINRA), Transamerica Financial Advisors consented to pay $8.8M over the unsuitable sales of mutual funds, variable annuities (VAs) and 529 savings plans to customers.
$4.4M of this is a fine and $4.4M is restitution to about 2,400 customers who were financially harmed. The firm settled with FINRA but without denying or admitting to its findings.
FINRA contends that the broker-dealer failed to supervise its registered representatives who recommended these three products to customers between 2009 and 2016. This included selling about 51,000 variable annuity policies that resulted in approximately $591M in commissions that made up over 40% of the broker-dealer’s revenue.
At Shepherd Smith Edwards and Kantas (SSEK Law Firm at investorlawyers.com), our experienced FINRA arbitration attorneys are here to pursue investor claims against the broker-dealers whose inadequate supervisory systems and procedures have cost investors significant losses. Call SSEK Law Firm at (800)-259-9010.
Misstatements, Not Granting Sales Waivers & Unsuitable Recommendations
FINRA claims that the firm’s supervisory system for variable annuities had deficiencies from May 1, 2010, through May 15, 2016. This led to Transamerica not identifying when some of its brokers had made thousands of misstatements when recommending VA exchanges to customers.
Such purported misstatements included downplaying an existing VA’s benefits while overstating the benefits of the newer ones.
As to mutual fund sales, FINRA found that from January 1, 2009, through November 15, 2016, the firm depended on its registered representatives to decide when/if to apply sales charges waivers to such purchases but did not give employees the guidance they needed to do this properly.
Transamerica Financial Advisors is also accused of not putting in place a system that would have allowed such waivers to be properly applied. Because of this, said FINRA, mutual fund customers did not receive over $438K in sales charge waivers.
Transamerica Representatives Were Not Adequately Supervised When Recommending 529 Savings Plans
529 savings plans are tax-advantaged municipal securities meant to encourage saving for a beneficiary’s future educational expenses. FINRA found that from May 1, 2010, through May 31, 2015, the broker-dealer did not adequately supervise its representatives’ recommendations involving certain 529 savings plans’ share classes.
Transamerica Financial Advisors also purportedly did not give its brokers enough guidance about how important it is to consider share-class differences when recommending these plans nor did it give supervisors the information they needed to properly assess whether recommendations were suitable for certain customers.
Brokerage Firm Negligence
SSEK Law Firm has been going after broker-dealers and their registered representatives for misconduct, securities violations, securities fraud, or negligence for over 30 years.
Our brokerage firm negligence attorneys have represented thousands of investors including retail investors, inexperienced investors, seniors, retirees, conservative investors, high-net-worth individual investors, and institutional investors.
Contact us today if you suspect your losses are due to the actions of your financial firm or its financial representatives so that we can help you explore your options during a free, no-obligation case consultation.