Written by D. Daxton White• March 20, 2014• 11:54 am• Blog, Securities Fraud Articles

FINRA Awards suggest that variable annuities remain a problem

Based on recent awards, it appears that variable annuities continue to be a problem in the securities industry. From January 1, 2013 to December 31, 2013 there were 38 decided that at least mentioned variable annuities as an issue in the case.

A variable annuity is an insurance contract in which, at the end of the accumulation stage, the insurance company guarantees a minimum payment. The remaining income payments can vary depending on the performance of the managed portfolio. According to a recent Investment News report, the following firms are the top participating issuers of annuities: MetLife, Prudential Financial, Jackson National, TIAA-CREF, Lincoln Financial Group, SunAmerica/VALIC, Nationwide, AXA Equitable, Ameriprise Financial, AEGON/Transamerica, Allianze Life, Pacific Life, Sun Life Financial, Protective, and New York Life. For more information on variable annuities and the types of problems with these investments, visit https://whitesecuritieslaw.com/2013/09/12/overview-of-variable-annuity-securities-fraud-cases/.

A summary of the 2013 awards that at least mentioned variable annuities as an issue in the case and where an award was entered in favor of the Claimant are as follows:

Case No.	Claimant(s)	Respondent(s)	Award of Panel

12-01903	Ruth Wayne	Keith L. Epstein	Respondent is liable for and shall pay to Claimant the sum of $1,817,622.00 in compensatory damages; Respondent is liable for and shall pay to Claimant the sum of $3,635,564.00 in punitive damages;
12-02507	Robert L. Cox	Ameriprise Financial Services, Inc. and Mitchell William Black	Claimant, Robert L. Cox, is to convey ownership to Respondents, Ameriprise Financial Services, Inc. and Mitchell Black, of the following non-publically traded REITS; (1) C.P.A. 16 REIT; (2) KBS REIT; (3) Inland American REIT. Claimant Robert L. Cox, is to pay to Respondents, Ameriprise Financial Services, Inc. and Mitchell William Black, an amount of money equal to the total of all dividends and other distributions, if any, received by Claimant from the REITS during his ownership of these REITS. Respondents, Ameriprise Financial Services, Inc. and Mitchell William Black, are to pay Claimant, Robert L. Cox, an amount of money equal to the price that Claimant paid for the purchase of these REITS, in the amount of $650,000.00; Respondents, Ameriprise Financial Services, Inc. and Mitchell William Black, are liable and shall pay to Claimant the amount of $111,824.00. This represents equitable relief in the form of relinquishment of certain commissions (“Gross Dealer Concessions”) received by Respondents “Retirement Advisor Variable Annuity” and a “RiverSource Retirement Advisor Variable Annuity” and return of fees charged to Claimant and paid to Respondents for Financial Plans;
12-01649	Dorie J. Hairfield IRA, Edmond F. Christian IRA, Richard E. Hairfield IRA	Centaurus Financial, Inc.	Respondent is found liable and shall pay to Claimants compensatory damages as follows: To Claimant Edmond F. Christian IRA: $300,000.00; To Claimant Richard E. Hairfield IRA: $435,000.00; To Claimant Dorie J. Hairfield IRA: $54,100.00.
12-03280	Michael and Germayne Tizzano	Money Concepts Capital Corp. and Craig Alan Sutherland	Respondents Money Concepts Capital Corp. and Craig Alan Sutherland are jointly and severally liable for and shall pay to Claimants, Michael and Germayne Tizzano, the sum of $10,322.00 in compensatory damages.
12-01093	Stephen Picarello, on behalf of Katherine Montesano	Citigroup Global Markets, Inc. and Lauro Santos Reyes	Respondents are jointly and severally liable for and shall pay to Claimant compensatory damages in the amount of $17,480.21.
09-05316	Shahin Aarabi	Ameriprise Financial Services, Inc. and Yousef Jamshidipour	Respondents Ameriprise and Jamshidipour are jointly and severally liable for and shall pay to Claimant the amount of $66,356.00 in compensatory damages.
11-00603	Chase Bailey	Merrill Lynch, Pierce, Fenner & Smith, Inc.; Deutsche Bank Securities, Inc.; Oppenheimer & Co., Inc.; Karl Edward Hahn; Deutsche Bank Alex Brown Division	Respondent Hahn is liable for and shall pay to Claimant compensatory damages in the amount of $4,134,962.18; Respondent Hahn is liable for and shall pay to Claimant punitive damages in the amount of $6,419,962.18. The panel awarded punitive damages pursuant to Massachusetts General Laws Chapter 93A.
09-00951	Associated Humane Societies, Inc.	Merrill Lynch Pierce Fenner & Smith Inc.; Merrill Lynch Trust Co.	Merrill Lynch and Merrill Trust are jointly and severally liable for and shall pay to Claimant compensatory damages in the amount of $168,103.00. Merrill Lynch and Merrill Trust are jointly and severally liable for and shall pay to Claimant punitive damages in the amount of $126,077.00.
11-04113	Allen L. Hauser	First Allied Securities, Inc.; Morris C. Weisner	Respondent Weisner is liable on the claims for unsuitability and breach of fiduciary duty and shall pay to Claimant compensatory damages in the amount of $177,116.00, pre-judgment interest specifically excluded.
12-03055	Karen Warstler	Loretta Kay Barmes and Chase Investment Services Corp.	Respondents are jointly and severally liable for and shall pay to Claimant compensatory damages in the amount of $1,500.00.
11-04763	William D. Stuart, Jr.; Grace Anne Stuart Nay; The Estate of William D. Stuart, Sr., Deceased	Wells Fargo Advisors, LLC	Respondent is liable for and shall pay to Claimants $131,127.27 in compensatory damages; Respondent is liable for and shall pay to Claimants attorneys’ fees and costs in the amount of $175,000.00 pursuant to contract and Texas statute.

Financial advisors have a fiduciary duty to put their client’s needs ahead of their own. If a stockbroker recommends an investment that is unsuitable for the client or fails to perform adequate due diligence on an investment, the advisor and his/her firm can be held liable for the resulting losses.

The White Law Group continues to investigate the liability that brokerage firms have for improperly recommending variable annuities.

If you believe that you are the victim of your advisor recommending a variable annuity to you inappropriately, please call the securities attorneys of The White Law Group at 312/238-9650 for a free consultation.

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