SWS Financial Charged With Improper Supervision of Variable Annuity Transactions

Posted on October 12th, 2014 at 6:45 PM

From the Desk of Jim Eccleston at Eccleston Law Offices:

FINRA has filed charges alleging that SWS had inadequate supervisory systems and written supervisory procedures to supervise its Variable Annuity business.

During September 2009, sales of variable annuities made up 16% to 20% of SWS' total revenues.  However, SWS failed to implement specific procedures to approve VA sales generated in its offices that didn't have an onsite supervisor. These offices accounted for about 1,300 of the more than 1,500 variable annuity transactions executed by SWS's reps during the relevant period.

Without the necessary supervisory review, some fishy VA deals slipped through the cracks. In one scenario, a rep recommended that 29 of his clients swap VAs issued by MassMutual Life Insurance Co. for those from Jackson National Life Insurance Co. because the latter would no longer issue certain guaranteed living benefits. At least three of the 29 exchanges might have been inappropriate because the clients hadn't reached the appropriate age of 45 to add the benefits offered by Jackson National.

The attorneys of Eccleston Law Offices represent investors and advisers nationwide in securities and employment matters. Our attorneys draw on a combined experience of nearly 50 years in delivering the highest quality legal services.

Related Attorneys: James J. Eccleston


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