FINRA Fines VALIC Financial Advisors $350,000 for Failure to Supervise Variable Annuity Sales Practices

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Updated on: March 19, 2021

On January 8, 2021, VALIC Financial Advisors agreed to a Letter of Acceptance, Waiver and Consent (AWC) (Case No. 2018060548501)  which included a Fine of $350,000 by the Financial Industry Financial Authority (FINRA), the securities industry regulator established to protect investors.  According to the agreement with FINRA, VALIC Financial Advisors “consented to the sanctions and to findings that it failed to establish a reasonably designed system and written procedures for the surveillance of rates of variable annuity replacements and for corrective action in the case of inappropriate replacements”.  FINRA also determined. “The procedures also failed to provide guidance as to what would be considered a high rate of variable annuity replacements. The firm did not maintain an accurate or readily accessible record of all variable annuity exchange transactions it executed. As a result, when the firm conducted reviews for inappropriate rates of exchange, not all variable annuity exchange transactions were included in those reviews”.

Factors to Consider in Before Replacing Variable Annuities 

VALIC Financial Advisors focuses on the marketing and distribution of variable annuity retirement plan products to public employees and educators for school systems throughout the country.  Variable annuity replacements can result in longer surrender periods, potential surrender charges and greater costs that are associated with the compensation paid to a brokerage firms and financial advisors.  According to FINRA Sales Practice Rules and Regulations, the recommended purchase or exchange of a variable annuity requires that a financial brokerage firm and its financial advisors must make a reasonable inquiry as to a client’s situation to ensure that “switching” variable annuity contracts is a suitable investment recommendation.  Due to the complexities of variable annuities, complete disclosure of all relevant benefits and costs need to be disclosed to investors.

The Financial Industry Regulatory Authority, (FINRA) enforces rules and regulations that govern the brokerage firms conduct and safeguard the investing public. FINRA securities arbitration claims may allow investors to claim losses based on facts related to the investment advice provided by full-service brokerage firms and its financial advisors.

KlaymanToskes Can Help Recover Investment Losses 

According to KlaymanToskes, many investors who were advised to replace their existing Variable Annuity Contracts through full-service brokerage firms, such as VALIC Financial Advisors failed to educate investors about the increased surrender period, increased costs and lost benefits which may be the result of a conflict of interest due to the compensation paid brokerage firms and its financial advisors.  Any recommendations which resulted in unsuitable investment advice and/or failure disclose all relevant facts are causes of action that may be available for investor claims against their full-service brokerage firm in an individual securities arbitration claim filed with FINRA.

The sole purpose of this release is to investigate whether VALIC Financial Advisors recommended replacement of existing variable annuity contracts was suitable for investors.   For investors  with investment losses that exceed $250,000 in variable annuity contracts with any full-service brokerage firms, and have information relating to the manner in which the firm handled their accounts are encouraged to contact Lawrence L. Klayman, Esq., at (561) 542-5131, and download our Special Investor Report.


Lawrence L. Klayman, Esq., (561) 542-5131