FINRA Cracks Down on Eight Firms for Failure to Supervise

The Financial Industry Regulatory Authority Inc. has fined eight firms a total of $6.2 million and ordered five of them to pay another $6.3 million in restitution for failing to supervise the sales of variable annuities products.

As part of the settlement, FINRA sanctioned Voya Financial Advisors, five broker-dealer subsidiaries of Cetera Financial Group, Kestra Investment Services and FTB Advisors Inc., according to its action notice. The firms entered into the settlement without admitting nor denying the charges.

Cetera Advisors, First Allied, Summit Brokerage and VSR will collectively pay customers at least $4.5 million and Voya was ordered to pay its customers at close to $1.8 million.

FINRA stated that L-share annuities could pay greater compensation to the firms and registered representatives than more traditional share classes. The variable annuities in question were L-share annuities that are considered potentially incompatible, complex and expensive long-term minimum-income and withdrawal riders, according to the document.

FINRA said such complex investment products are only suitable for a narrow class of customers, and that the firms have not provided its advisers with reasonable guidance on discerning this class of customers.

In addition to the unsuitable investment violation, FINRA also found that Voya, Cetera Advisors Networks, Cetera Financial Specialists and VSR did not monitor rates of variable annuity exchanges.

Brokerage firms are required to adequately supervise their agents to ensure they are complying with FINRA rules and they can held responsible for any losses in a FINRA arbitration claim if it is determined that they failed to properly supervise their agent.

 If you suffered losses investing with Cetera Advisors or another broker-dealer , the attorneys at The White Law Group may be able to help. For a free consultation, please call (888) 637-5510.

For more information see Unsuitable Investments (Unsuitability), Informational Video about Securities Fraud.

 The foregoing information, which is all publicly available on FINRA’s website, is being provided by The White Law Group. The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Franklin, Tennessee.

For more information please visit www.whitesecuritieslaw.com.