FINRA fined Farmers Financial Solutions of Westlake Village, California $100,000 for failing to adequately supervise variable universal life insurance contract (VUL) and mutual fund sales, leading to questions of whether some of its VUL and mutual fund sales were suitable for its customers.
Insofar as the mutual fund transactions are concerned, FINRA identified substantial upfront sales charges (front-end loads) incurred by customers for Class A mutual fund share switches as investments that were potentially recommended to customers without a reasonable or suitable basis.
This continues in FINRA's tradition of pursuing firms who unsuitable recommended Class A mutual fund switches: in 2019, for instance, FINRA ordered Voya Financial Advisors pay nearly $2 million over a Class A mutual fund investigation that determined the firm failed to supervise advisers and failed to apply front-end sales charge discounts to eligible retirement plan customers.
Present-day AWC #2017052173001 also addressed Farmers Financial's tens of millions of dollars in VUL sales, writing that the firm failed to establish or maintain an adequate supervisory system for both the VULs and mutual funds transactions.
For the VULs, the firm purportedly had information about lapsing policies but failed to further investigate the lapses and failed to consider whether VUL sales were suitable for the customers to whom the VUL transactions were recommended.
The report states that the lapsed VULs sometimes resulted in commission clawbacks; this and other actions related to failed supervision may have proven harmful to Farmers Financial's customers.
If you invested with censured firm Farmers Financial Solutions (Westlake Village, CA) or with any broker, investment adviser, or brokerage whose unsuitable recommendations or failure to supervise its representatives' recommendations has resulted in financial harm such as losses or excessive sales charges, fees, and commissions, 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.