Annuity exchange, exchanging or liquidating one annuity to acquire a new annuity, can be a form of fraud. The cost of trading annuities is substantial. Generally, the cost the annuity exchange greatly outweighs any benefit of “upgrading” to a new annuity. If you believe you have been recommended an inappropriate annuity switch you should contact an attorney.
In June 2025, PNC entered into a settlement with the regulator FINRA concerning variable annuity (VA) exchanging. The regulator alleged that PNC did not supervise their advisors sufficiently to prevent the inappropriate exchanges from happening. PNC agreed to pay a $200,000 fine and a censure.
VAs are complex investments containing securities and insurance features that allow investors to choose among a variety of features. Due to the complexity, FINRA requires that firms provide more comprehensive and targeted protection to investors who purchase or exchange VAs.
Annuity exchange or replacement is also a violation of many state insurance regulations.
From at least June 2021 to the present, PNC failed to have a supervisory system to appropriately monitor rates of deferred VA exchanges. PNC’’s supervisory system did not require the firm to assess advisor rates of exchanges. Instead, PNC relied on transaction-by-transaction supervisory approvals as opposed to having actual guidelines and procedures in place.
Furthermore, the firm’s supervisory system did not require supervisors to track or perform any further review of VA exchange rates that raised for review whether their conduct was inconsistent with applicable FINRA rules or the federal securities laws. PNC also failed to conduct such supervision despite several advisors having high rates of exchanges during this period. The firm also did not provide guidance to assist supervisors in evaluating whether representatives’ exchange rates warranted further review or for them to otherwise assess representatives’ aggregate exchange activity.
We have represented investors for over 20 years and have seen the harm annuity exchanges can do to an individual’s savings. Investors should educate themselves on the peril of annuity or insurance exchanges prior to agreeing to such transactions. This post is meant to educate the investing public on these perils.
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