FINRA Sanctions Ameriprise for Supervisory Failures in Variable Annuity Exchanges
From the desk of Jim Eccleston at Eccleston Law
The Financial Industry Regulatory Authority (FINRA) has fined Ameriprise Financial Services and ordered restitution to resolve allegations that the firm failed to adequately supervise certain variable annuity exchange recommendations.
According to reporting by Financial Advisor News, the matter centers on transactions that occurred between January 2015 and December 2018 involving annuity contracts with guaranteed lifetime withdrawal benefit riders. FINRA found that the firm's supervisory framework did not provide sufficient guidance to evaluate whether clients would benefit from exchanging older contracts for newer versions with added features and higher costs.
According to reporting by Financial Advisor News the newer annuity products included a "growth credit" feature that increased a customer's benefit base at a guaranteed rate if withdrawals had not yet begun. While that feature offered potential value, it also carried higher fees. FINRA determined that Ameriprise did not adequately address whether those added costs made sense for clients who were near or already in the withdrawal phase.
According to Financial Advisor News, the investigation identified 114 customers who completed exchanges despite either planning to begin withdrawals or doing so shortly after. In those cases, the growth credit feature provided limited or no benefit, while the increased fees remained in effect. FINRA calculated that these customers incurred an average additional cost of more than $8,700 per transaction.
FINRA concluded that the firm violated Rule 3110 governing supervision, Rule 2330 governing variable annuity transactions, and Rule 2010 requiring high standards of commercial honor. The firm resolved the matter through a FINRA Acceptance, Waiver and Consent (AWC) letter, agreeing to a censure, a $450,000 fine, and approximately $994,000 in restitution to affected customers.
Ameriprise accepted the findings of the AWC without admitting or denying them.
Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.
Tags: eccleston, eccleston law, finra sanctions, variable annuities, supervisory failures, ameriprise financial, securities regulation





