Broker/Dealers Who Sold Variable Annuities with Hedge Funds Scrutinized by FINRA

FINRA, the Financial Industry Regulatory Authority, is investigating independent broker-dealers that sold variable annuities with subaccounts invested in hedge funds that resulted in $18 million in client losses during the credit crisis writes Bruce Kelly in a recent article for InvestmentNews.com.

FINRA has been investigating the sale of a variable annuity issued by Sun Life Financial Inc. The two hedge funds were the Foresee Strategies Insurance Fund and the Foresee Strategies 3(c)(1) Insurance Fund LP, which were related to a group called the SALI Multi-Series Fund LP.

Kelly writes that the broker-dealers that have faced FINRA arbitration complaints from investors regarding the Sun Life annuities include: Geneos Wealth Management Inc., Lincoln Financial Network, National Planning Corp., SagePoint Financial Inc., and FSC Securities Corp.

A FINRA spokeswoman Michelle Ong would say only that the brokerage industry's self-regulator does not confirm investigations.

A FINRA arbitration panel has issued a $284,000 award to a SagePoint client, who filed a claim against the firm last year. His arbitration complaint alleged unsuitability, common law fraud, breach of fiduciary duty and negligence related to investments in the SALI Multi-Series Fund and the SALI Multi-Series Fund 3(c) (1) LP.

InvestmentNews.com writes that the fund was put together in 2004 to 2007, which was called a period of low volatility. The strategy collapsed when the market crashed beginning in September 2008 and then rebounded sharply in March 2009. One fund lost 90% of its value; the other lost 75%.

Three of the broker-dealers have resolved litigation, with more to come against SagePoint and National Planning. Investors are also suing Sun Life Financial in state court in Tennessee.

If you or a family member were sold a variable annuity with a hedge fund and experienced financial losses, contact an attorney at Soreide Law Group for a free consultation on how to recover your investment losses. To speak with an attorney, call 888-760-6552, or visit https://www.securitieslawyer.com.