FINRA alleges, that between September 2019 and May 2022, Supreme Alliance failed to take appropriate actions to prevent annuity “switching fraud.”
Specifically, Supreme failed to establish and maintain a supervisory system and written supervisory procedures reasonably designed to supervise recommendations of purchases and exchanges of deferred variable annuities, an action that charges investors high commissions, and supervise the conduct and documentation of investigations into newly hired brokers.
Variable annuities are complex, long-term investments that offer tax-deferred treatment of earnings and contain securities and insurance features. These features may include guaranteed periodic income payments or a guaranteed death benefit. FINRA requires that firms and their associated persons exercise particular care before recommendation of a variable annuity.
Switching or exchanging of annuities is generally suspect. Annuities pay high commissions due to the long-term nature of annuities. An investor incurs a very high cost when that investor sells an existing annuity to purchase a new annuity. Additionally, the investor receives the cash value which does not compensate for the growth of the investment and often includes penalties for the withdrawal. There are very few features in a replacement annuity that can justify such costs.
Jeffrey Pederson represents victims of annuity switching. Please contact him to discuss questionable annuity switching or exchanges.
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