Securities Fraud and Mismanagement

Attorney and Counselor at Law

303-300-5022 / 844-253-5858 Toll Free

Did the actions/inactions of my broker fall below the required standard of care?

We’ll tell you, for FREE.

We help investors who believe that they are victims of variable annuity fraud for 20 years.  Variable annuity fraud has always been a frequent trick of brokers looking to put their own interests ahead of their investors (often by selling to those approaching retirement which is generally an unsuitable recommendation).  The investments pay an extremely high commission and the investments are only suitable for a small section of the investing public.  

Exchanging one variable annuity for another variable annuity is a form of fraud. Annuities are high-cost investments and the sale of one for the purchase of another can cause the loss of costs previously paid.  The purchase of a new annuity also causes an investor to incur substantial new charges and conditions that make the savings less liquid. 

A variable annuity is part security and part insurance.  The securities and insurance rules of many states limit the ability of a broker to recommend the sale of one insurance or annuity product for the purchase of another.  Federal regulators have warned against switching.

Some states require not only that a comprehensive notice be given to an investor of the extensive cost of switching insurance products or annuities but that the notice be read aloud to the investor and that the investor sign that the notice was read.  Many states still prohibit most exchanges even with such extensive notice.

The large commission is the reason for annuity fraud.  Annuities can pay a broker a commission up to 15%.  Compare this to a commission of less than 1% most brokers make on the sale of a stock or a bond.  

The concern can include not only the switch from one annuity to another, but between insurance and annuities, and other investments and annuities.  

In May 2019 Woodbury Financial entered into a settlement agreement with regulators concerning systemic practices of exchanging annuities.  Annuities pay a commission that is very high compared to most suitable investments.  There is very little that would justify the switching of one variable annuity to another variable annuity other than the windfall that such an exchange provides the broker.

There are other schemes involving variable annuities where brokers enrich themselves at the expense of investors.  As reported in, the Securities and Exchange Commission Thursday, March 13, 2014, filed charges against a group of brokers in a scheme wherein investors used variable annuities to wager on the lives of the terminally ill.

The brokers in question were Michael A. Horowitz of Los Angeles and Moshe Marc Cohen of Brooklyn, N.Y.

The brokers allegedly obtained the personal health and identification data of the dying patients through fraud, marking them as annuitants on variable annuity contracts that he had marketed to wealthy clients, according to the SEC’s complaint.  Under false pretenses, the brokers allegedly received their employers’ approval to sell the annuities.  The motivation with this plan, as with most fraudulent sales of variable annuities was the commission.  Variable annuities pay as large of a commission as just about any investment product that you can purchase through a securities brokerage.  The brokers reaped approximately $1 million in commissions from their sale, the SEC claimed, with Mr. Horowitz obtaining more than $300,000 and Mr. Cohen became unjustly enriched to the tune of more than $700,000.

If you have lost money with these or any other brokers you believe may have defrauded or mismanaged you portfolio call 303-300-5022 or toll-free at 1-844-253-5858.  

Brokers do not always make complete disclosures in the switching of variable annuities.
Variable annuity switching is a practice where a broker has a large incentive to not disclose all the facts.