Variable annuities are “hybrid investments containing securities and insurance features.” Because of this, they are complex investments. If your broker sold you this product, without disclosing the risks and features that accompany it, a New York variable annuities law firm like Malecki Law can review your variable annuities at no cost. A variable annuity is a contract between you and the insurance company. The variable component means that the returns are not stable, therefore you may incur profits or losses on the investment.
Moreover, the sale of variable annuities is fraught with issues for investors, from high sales charges, penalties for early withdrawal to choices in underlying investments and lifetime insurance benefits. If your broker recommended you invest in variable annuities, it may have been unsuitable for you. You need to contact a New York variable annuities attorney like the lawyers at Malecki Law to review and assess your portfolio. Sales of variable annuities are regulated by both the SEC and FINRA. Many issues can arise around questionable sales practices fueled by high pay-outs for brokers.
Variable annuities may seem like mutual funds because of the way the financial instruments are invested, however there are distinctions between the two. For example, earnings in variable annuities are tax-deferred. Further, variable annuities may offer death benefits and guaranteed living benefits as well. Variable annuities are complex financial instruments. Therefore, your broker should understand how variable annuities work, explain how they work to you, as their client, and disclose the relevant risks and costs that come with investing in them.
FINRA Rule 2330 provides guidance and a standard from which to judge whether a broker or advisor has breached their obligations to you for which you might have a negligence, contractual and/or fraud case. Further, the rule imposes heightened suitability and additional requirements regarding variable annuities specifically. If your broker recommended that you purchase variable annuities, without properly informing you of the inherent risks, your broker probably should not have sold you variable annuities in the first place. An experienced variable annuities lawyer in New York at Malecki Law can review your investment portfolio at no cost. FINRA may suspend a broker’s license for recommending variable annuities to a client when it is unsuitable for the client. For example, FINRA suspended a broker’s license for recommending a retired couple to purchase a variable annuity.
FINRA holds brokers and brokerage firms accountable for recommending variable annuities when they are unsuitable investments for clients. For example, FINRA fined Banc One $225,000, for unsuitable variable annuity sales and related supervisory issues. The firm sold the unsuitable investment to twenty-three of its customers, twenty-one of whom happened to be over the age of seventy years old.Recovering Investment Losses Through Arbitration or Mediation
Investors who lose money because of unsuitable investments may have grounds to hold the responsible broker and brokerage firm accountable through investor arbitration or mediation, which are types of dispute resolution processes that function as alternatives to litigation. If you notice all your investments are locked up, your broker may have wrongfully sold you variable annuities. You need a New York variable annuities law firm like Malecki Law to review your experience with variable annuities in a free consultation and to ultimately determine if you have a case. Depending on the circumstances, investors may allege unsuitability, misrepresentation, and/or other fraud and misconduct claims against a broker. They may also look to hold the representative’s brokerage firm accountable for failures to supervise and other breaches of conduct.