FINRA continued its crackdown on firms with deficient variable annuities (VAs) policies and supervisory procedures by censuring and fining VALIC Financial Advisors, Inc. $350,000 for what it deemed a failure to establish written supervisory procedures for VA exchange surveillance and review of VA transactions for suitability.
The latest discipline follows FINRA's 2016 punishment in which Enforcement fined VALIC Financial Advisors $1.75 million for failing to detect and address conflict of interest situations related to variable annuity (VA) transactions. Specifically, FINRA found that VALIC brokers were financially rewarded for recommending or effecting certain VA transactions—regardless of suitability—and that the firm failed to supervise its VA business.
Four years later, FINRA has once again determined that VALIC's VA business and deficient supervision merits discipline. Investigators also found that VALIC failed to timely report information about 174 written customer complaints filed against the firm in 2017 and 2018.
In AWC #2018060548501, investigators wrote that VALIC's surveillance procedures for its 26,000 VA exchanges from 2017 through 2018 were "not reasonably designed," that the firm failed to identify what would qualify as an inappropriate rate of VA exchanges and that it did not maintain an accurate record of all VA exchange transactions executed by the firm.
FINRA also found that VALIC failed to reasonably supervise recommendations involving the investment of additional funds into an existing VA and failed to outright review approximately 400 solicited transactions concerning additional investments into non-qualified VAs.
Headquartered in Texas, VALIC Financial Advisors is licensed in all 50 states and additionally operates as AIG Retirement Services.
If you have invested with VALIC Financial Advisors, or with any broker or investment adviser whose recommendation relative to variable annuity (VA) switches or other transactions was not suitable given your investment objectives and risk tolerance preferences, and this inappropriate purchase or sale has proven harmful to your financial interests, please call an experienced FINRA arbitration attorney at The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.