Articles Tagged with James Day

At a recent Financial Industry Regulatory Authority (FINRA) conference, regulators discussed how variable annuities, complex products that are often marketed to seniors, are still at issue. Russ Ryan, FINRA senior vice president and deputy chief of enforcement stated in yesterday’s InvestmentNews: “Variable annuities are just very frequently involved in our cases.” On Monday, James Day, FINRA vice president and enforcement chief counsel, told an IRI audience that variable annuities exist at a nexus that FINRA targets. He stated “They are at the sweet spot of complex products marketed to retirees and people about to retire.” Recently, FINRA hit MetLife with a record $25 million penalty for misleading variable annuity sales. The regulator found that MetLife financial advisers made misrepresentations and omissions of fact in 72% of 35,500 applications the firm approved between 2009 and 2014 to replace clients’ existing variable annuities with new ones. The new products were touted as less expensive and more beneficial, when clients would have been better off keeping their existing investments. Most of the issues centered on training and supervision of the advisers involved in the sales. IRI audiences are encouraged to “be more vigilant,” and a little more skeptical in reviewing these transactions.

Another area where FINRA will be cracking down is on L-share variable annuities, products that offer increased liquidity and a shorter surrender-penalty period of about three years instead of seven. Some sort of heightened procedures may be required for those who have a fairly high percentage of L-shares with long-term riders. This may have a major financial impact on anybody who sells a lot of variable annuities and, particularly, a lot of L-shares.

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