FINRA Fines and Suspends Broker for violations in YouTube Video

The Financial Industry Regulatory Authority (FINRA) recently suspended and fined a broker for a social media violation involving equity index annuities writes Elizabeth Festa in a recent article for LifeHealthPro.

The registered representative publicly released videos through YouTube, sending out invitations to seminars and letters regarding bonus incentives that did not comply with FINRA’s rules, according to the settlement. The representative, Ralph Hicks, Jr., was fined $10,000 and suspended for 20 business days. Hicks has been registered with FINRA since 1986, and had no previous disciplinary issues. These actions took place over two years.

FINRA alleges that Hicks presented equity index annuities favorably in comparison to other types of annuities without disclosing the risks and limitations associated with them. Left out of the videos were, "the risks and limitations of EIAs, such as their lack of liquidity due to surrender penalties, that guarantees associated with EIAs are subject to the ability of the issuer to pay the claims, and limits posed by participation rates and interest rate caps. Moreover, the materials contained incomplete comparisons of EIAs to other annuity types," FINRA found.

The “communications also presented oversimplified claims that omitted material information or failed to provide a sound basis for evaluating the facts, and contained exaggerated, unwarranted or misleading statements." Hicks allegedly failed to file with FINRA advertising that discussed registered investment companies within 10 business days of its first use or publication.

Equity index annuities are often said to be the fastest growing segment of the annuity market. There were record indexed annuity sales of $33.9 billion posted in 2012.

Soreide Law Group, PLLC, represents investors nationwide before the Financial Industry Regulatory Authority (FINRA) and can be reached at 888-760-6552.