VALIC Financial Advisors to pay $350,000 for Supervisory Failures

VALIC Financial Advisors has agreed to Sanctions for Failure to Supervise VA Exchanges

The White Law Group is investigating potential securities claims involving VALIC Financial Advisors and the liability it may have for failure to supervise its financial advisors.

According to a Letter of Acceptance, Waiver and Consent (AWC) signed on January 7, 2021, the Financial Industry Regulatory Authority (FINRA) has censured and fined VALIC Financial Advisors (CRD#: 42803) $350,000 for supervisory failures in connection with inappropriate VA exchanges.

From January 1, 2017 through October 31, 2018, VALIC reportedly failed to establish a reasonably designed system and written supervisory procedures for the surveillance of rates of VA exchanges and for corrective action in the case of inappropriate exchanges, according to the AWC.

During this time, FINRA said that the firm also failed to supervise the review of transactions where a registered representative recommended that a customer invest additional funds into an existing VA, in violation of FINRA Rules.

Further, VALIC reportedly failed to timely report statistical and summary information for 174 written customer complaints received by the firm between June 26, 2017 and March 20, 2018, according to the AWC.

Variable Annuity Exchanges or VA Switching

Overselling variable annuities or variable annuity switching can be a problem and is not in the best interest of the investor.

For a client to truly benefit from investing in variable annuities, it is the long term that pays off. Sometimes a broker may entice his client to sell variable annuities to roll into another annuity for the sole purpose of collecting commissions. Not only does the client lose the income that they were receiving from the annuity that was sold, but they will have to pay a surrender charge as well as commissions on whatever product they are switching to.

Every time a broker sells a variable annuity, they receive a larger than average commission for the sale, which is anywhere from 3-7%. Many brokers primarily work for commissions, and may not always have their client’s best interest in mind. The Insurer of the annuity makes their money on annuity fees and management services.

Filing a Complaint against your Brokerage Firm

All broker-dealers have a responsibility to adequately supervise its employees. They must ensure the necessary procedures and systems to detect misconduct.  Brokerage firms that fail to monitor the business activities of their employees may be liable for investment losses due to negligent supervision for the misconduct of their employees.

When brokers violate securities laws, such as making unsuitable investments, the brokerage firm they are working with may be liable for investment losses through FINRA Arbitration.

Free Consultation with a Securities Attorney

If you are concerned about your investments with VALIC Financial Advisors, the securities attorneys at The White Law Group may be able to help you. For a free consultation with a securities attorney, please call The White Law Group at (888) 637-5510.

The White Law Group is a national securities fraud, securities arbitration, and investor protection law firm with offices in Chicago, Illinois. For more information on The White Law Group and its representation of investors, please visit https://whitesecuritieslaw.com.