Fifth Third Securities Fined $4 Million by FINRA Over Variable Annuity (VA) Sales


The Financial Industry Regulatory Authority Inc. (FINRA) fined Fifth Third Securities $4 million and ordered it to pay approximately $2 million in restitution to their clients.  FINRA stated they fined Fifth Third for “failing to appropriately consider and accurately describe the costs and benefits of variable annuity exchanges.”

FINRA also stated that this was the second time they took action against Fifth Third Securities involving their sale of variable annuities (VA).  FINRA alleged Fifth Third recommended VA exchanges without a reasonable basis to believe the exchanges were suitable.

According to FINRA, in a review of a sample of VA exchanges that Fifth Third Securities approved from the time period of 2013 through 2015, FINRA found that Fifth Third, “misstated or omitted at least one material fact relating to the costs or benefits of the VA exchange in approximately 77% of the sample.” FINRA stated that many of the misstatements concerned policy riders.

Also, FINRA found that Fifth Third Securities failed to ensure that their brokers “obtained and assessed accurate information concerning the recommended VA exchanges.” According to FINRA, they found that Fifth Third brokers and principals were inadequately trained in how to compare the features of VAs. FINRA said because of this Fifth Third misstated the costs and benefits of exchanges, making the exchange appear more beneficial to the client. In spite of their errors, FINRA found that Fifth Third’s principals approved approximately 92% of VA exchange applications which were submitted to them for review.

FINRA reached a settlement with Fifth Third in 2009, over 250 unsuitable VA exchanges and transactions and a finding that the Fifth Third Securities’ systems and procedures regarding VA exchanges were inadequate.  FINRA stated that for the four years following the settlement, Fifth Third failed to completely implement an independent consultant’s recommendation that they develop certain surveillance procedures to monitor VA exchanges by individual registered representatives.

If you suffered losses due to the actions or recommendations, particularly in the sale of variable annuities, of Fifth Third Securities, contact Soreide Law Group and speak to an experienced securities lawyer at no cost regarding the possible recovery of your investment losses through a FINRA arbitration at:  888-760-6552.

Soreide Law Group represents clients nationwide before FINRA.  We operate on a contingency fee basis, no fee if no recovery.

2018-05-10T16:04:12+00:00May 10th, 2018|

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