Earlier this month, MetLife Inc. agreed to pay a $25 million fine to settle an investigation into abuses tied to variable annuity sales. This was the highest ever penalty for the sale of those products, according to the Financial Industry Regulatory Authority (FINRA). This includes a $20 million fine and $5 million to be paid to customers for “negligent” misrepresentation and omissions, according to a FINRA statement. Firms such as MetLife that engage in the sale of variable annuities must ensure that the information it gives its clients is accurate when determining the costs and benefits of those products. If the firm does not, it can be held liable for money losses. FINRA has had increased scrutiny of variable annuity sales, as they can be complex, risky and illiquid products, and are not suitable for all investors. If you purchased a MetLife variable annuity, or one was recommended to you by a MetLife broker, please call 312-332-4200. We are securities attorneys who may be able to help you bring a claim against the brokerage firm in order to recover your money losses on a contingency fee basis. We sue firms in the arbitration forum.
Did you lose money with Swan Sihua Shen, a registered broker with Capital Financial Services? Ms. Shen allegedly violated firm policies by copying and pasting client signatures, and altering forms. This resulted in her being terminated from her former firm, CBS. This is against firm policies and Financial Industry Regulatory Authority (FINRA) rules. A broker must follow all firm policies and FINRA rules or else her brokerage firm may be liable for investment losses. Please call our Chicago-based law firm today if you suffered losses with Ms. Shen. We may be able to help you bring a claim against Capital Financial Services in order to recover investment losses on a contingency fee basis. We only make money if you recover yours. The call is free with no obligation. 312-332-4200.
Ms. Shen was registered with Mony Securities Corp, Metropolitan Life Insurance Company, MetLife Securities, CUNA Brokerage Services, Capital Financial Services, and Cantella Inc. he is currently registered with Capital Financial Services in Burlington, Massachusetts and has been since October 2014. He has two customer disputes against him, according to his online FINRA BrokerCheck report.
James P. Kolf, a former registered broker in Sauk City, Wisconsin, was recently accused of setting up a phony investment venture that used hundreds of thousands of dollars to pay his personal bills. Kolf set himself up as sole proprietor of SFN Financial Network, which was a fictitious company. Allegedly, between 2011 and 2016, he defrauded 14 investors out of $905,000 in amounts from $9,000 to $150,000, promising to invest the funds in energy companies and returns of six to eight percent annually. At least eight of his customers liquidated accounts to move the money to Kolf’s fake investment. Kolf allegedly paid $47,572 in phony investment payments to convince early investors they were making money and mailed false account statements to investors reflecting re-investments of their interest, according to a consent order. He used the rest of the money to make car payments, pay legal bills and to pay federal tax bills and to make home improvements. These are all against securities laws.
Kolf was registered with John Hancock in Boston, Massachusetts from November 1981 until May 1997, Signator Investors in Madison, Wisconsin from November 1981 until October 2009, New England Securities in Middleton, Wisconsin from September 2009 until January 2015, MetLife Securities in Middleton from January 2015 until May 2016 and NYLife Securities in Madison, Wisconsin from May 2016 until August 2016. He has five customer disputes against him, four of which are currently pending. Please call our law firm today to speak to an attorney if you suffered losses with Mr. Kolf. We may be able to sue his former firm, New England Securities, in the Financial Industry Regulatory Authority (FINRA) arbitration forum on a contingency fee basis.
Stoltmann Law Offices is interested in speaking to those investors who may have invested money with Swan Shen, a broker with Capital Financial Services in Burlington, Masschusetts. Shen allegedly copied and pasted client signatures, altered forms and created consolidated customer statements which were then provided to certain customers without pre-approval from CUNA Brokerage Services, her member firm at the time. She was placed on heightened supervision. She also allegedly copied and pasted to place non-genuine signatures of four separate customers on two mutual fund order forms and one account application, on a separate occurrence. These are against securities rules and regulations. Shen was registered with Mony Securities, Metropolitan Life Insurance Company, MetLife Securities, CUNA Brokerage Services in Waltham, Massachusetts from April 2001 until September 2013, Capital Finance Services and Cantella & Co. She is currently registered with Capital Financial Services in Burlington, Massachusetts and has been since October 2014. She has two customer disputes against her.
The Financial Industry Regulatory Authority (FINRA) recently barred Winston Turner, a former broker with Pruco Securities in Sarasota, Florida. He allegedly falsified information relating to variable annuity transactions. He allegedly misrepresented the source of funds in variable annuity application materials in connection with exchanges by clients. He also further allegedly lied to the firm about the source of the funds for the variable annuity purchases and about the relationship between a client and his former marketing assistant. He also allegedly engaged in deceptive conduct by misrepresenting his personal email addresses as the email addresses of his clients, bearing forged signatures of a client and by making payments to a client from his own funds while creating the false appearance that the funds were coming from the firm. These are all against securities laws. Turner was registered with MetLife Securities in Atlanta, Georgia from December 2011 until July 2013 and Pruco Securities in Sarasota, Florida from July 2013 until August 2015. He has 18 customer disputes against him, one of which is currently pending. He has one criminal disposition. He is not licensed and has been permanently barred from the industry. Please call our securities law firm today to discuss your options if you invested money with Winston Turner.
According to a recent InvestmentNews article, Fidelity Investments suspended sales of MetLife Inc.’s retail variable annuities, as their sales fell by almost 40% in the second quarter of this year. MetLife’s retail variable annuity sales were down 39% year-over-year in the second quarter, primarily due to the sales suspension by Fidelity. In 2015 alone, MetLife was the number eight seller of variable annuities, with more than $7 billion in total sales. In February, Fidelity suspended the sales of MetLife products in the Growth and Income Annuity and the Accumulation Annuity. This was because the insurer announced in January that it was planning a separation of its U.S. retail unit, which provides variable annuities. This uncertainty over the potential sale or initial public offering of the business led to its decision to stop the sales. MetLife had $1.1 billion in variable annuity sales in the second quarter, compared to $1.9 billion in the same quarter in 2015. Insurers have seen industry-wide variable annuity sales slide over the past several years. Total first-quarter sales were at their lowest in 15 years, due mainly to market volatility. Sales are expected to continue to go down as new regulation comes into effect next year. Please call our securities law firm today to speak to an attorney. 312-332-4200.
On Tuesday, the House passed a bill for legislation that aims to help financial professionals reduce elder fraud by providing them safe harbor if the fraud is reported to state or Federal regulatory and law enforcement entities. The House passed the vote by voice on Tuesday. The bill specifically provides that banks, credit unions, investment advisers, broker-dealers and insurance companies and certain supervisory, compliance and legal employees would be protected from civil or administrative liability as long as these employees received training in how to spot and report predatory activity and disclose any possible exploitation of senior citizens to state or Federal regulatory law enforcement. The bill was introduced last year by Senator Susan Collins (R-Maine), and Senator Claire McCaskill (D-Missouri). They are the chairman and ranking minority member, respectively, of the Senate Special Committee on Aging. It is based on legislation enacted in Maine. The bill has the support of the National Association of Insurance and Financial Advisers (NAIFA), the Insured Retirement Institute (IRI), SIFMA and the North American Securities Administrator Association (NASAA). A 2011 study by MetLife found that seniors lose an estimated $2.9 billion each year to financial fraud.
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.
According to a recent Wall Street Journal online article, variable annuities are about to face their toughest opponent yet: The Labor Department. A proposed rule, expected to be finalized as soon as next month, would hold advisers working with retirement savings to a “fiduciary” standard. That means an adviser must work in the best interest of the client, and it generally requires advisers and firms to avoid conflicts of interest, which could include commissions and other sales-based compensation. A variable annuity is a tax-deferred retirement vehicle that allows the investor to choose from a selection of investments, and then pays you a level of income in retirement that is determined by the performance of the investments chosen. This is compared to a fixed annuity, which provides the investor with a guaranteed payout.
If the rule becomes final with minimal changes from its most recent proposal, analysts say variable-annuity issuers might need to shift from paying sellers up front commissions, to a business model based on investors paying lower, ongoing fees. The commissions average around 8%. Some of the issuers of these complex retirement savings vehicles are Lincoln National Corp, MetLife, Prudential Financial Inc. and Jackson National Life Insurance Co. Variable annuity sales totaled almost $98 billion in the first nine months of 2015. These can involve complex annual fees that can go over 3%. Also, consumers pay the seller’s commissions indirectly through the ongoing charges and through surrender charges due if they drop a contract within several years of purchase. These high commissions can lead advisers and insurance agents to sell to some people who may not be best served by such an investment, and regulators have issued advisories. A broker has a duty to determine if an investment is right for a client by taking into account his or her age, net worth and investment objectives. If the broker does not, his firm can be sued in an arbitration forum. Please call our securities law firm to speak to an attorney to determine if you have a claim you may want to bring against the firm. The call is free.
The Financial Industry Regulatory Authority (FINRA) is investigating MetLife for its sale of variable annuities. According to the regulatory body, they are focusing on potential violations “regarding alleged misrepresentations, suitability and supervision in connection with sales and replacements of variable annuities and certain riders on such annuities. MetLife could potentially be fined and the investigation could lead to possible disciplinary actions. A variable annuity is an insurance contract in which, at the end of the accumulation stage, the insurance company guarantees a minimum payment. The remaining income payments can vary depending on the performance of the managed portfolio. The portfolio generally invests in equity securities and its performance determines the amount of this total payment. Variable annuities are not suitable for every investor and can be associated with a lot of risk.