Consumer Protection

As reported by InvestmentNews, A Financial Industry Regulatory Authority (FINRA) official recently expressed concern over the sale of variable annuities as the products continue to evolve and become more complex. Carlo di Florio, chief risk officer and head of strategy at FINRA was quoted as stating that variable annuities are now taking on features that resemble complex structured products. Structured products typically have features such as caps that limit returns during market rallies and floors that limit losses during market slumps. Now these features are appearing in variable annuity products. Variable annuities are already extremely complex products that are not suitable for all investors. Adding yet an additional level of complexity only heightens concerns that investors must understand what they are buying when they are recommended these vehicles.

As a background variable annuities are complex financial and insurance products. Recently the Securities and Exchange Commission (SEC) released a publication entitled: Variable Annuities: What You Should Know. The SEC encouraged investors considering a purchase of a variable annuity to “ask your insurance agent, broker, financial planner, or other financial professional lots of questions about whether a variable annuity is right for you.”

A variable annuity is a contract an investor makes with an insurance company where the insurer agrees to make periodic payments to you. A variable annuity may be purchased either in a single payment or a series of payments over time. In the annuity account the investor chooses investments and the value of the annuity “varies” over time depending on the performance of the investments chosen. The investment options for variable annuities are generally mutual funds.

Music lovers looking to reminisce while enjoying classic hits from the 80’s and 90’s may not be getting what they paid for. Producers have created and marketed a compilation of some of those classic tunes, which include songs such as “Only In My Dreams” by Debbie Gibson, “Jenny/867-5309” by Tommy Tutone, “Hold On” by Wilson Phillips, and “Ice Ice Baby” by Vanilla Ice. Unfortunately, the packaging and marketing of these discs never alerted consumers to the fact that they were not purchasing the original recordings.

On March 20, 2014, Gana Weinstein LLP filed a class action suit, on behalf of Celeste Farrell and other individuals who purchased the music albums: “Hits of the 80’s: Platinum Collection” 2-CD set and/or “Hits of the 90’s: Platinum Collection” 2-CD set. The Complaint alleges that Tutm Entertainment (also known as Drew’s Entertainment) misled consumers by failing to indicate that these albums were comprised of inferior quality re-recorded songs. The Complaint further avers that Tutm Entertainment allowed consumers to believe that they were purchasing a compilation of original recordings, and thus distorted their ability to make an informed purchase decision.

The story has gained significant traction, as it was picked up by various news outlets only two days after the Complaint was filed with the United States District Court, District of New Jersey. As reported by Hollywoodreporter.com, re-recording is considered to be an open secret within the music industry, with musicians often having legitimate, albeit self-serving, reasons for re-recording their original hits. The site explains that artists are often required to work around contractual obligations and copyright termination to generate additional revenue from some of their classic hits. Musicians rights to re-record, however, do not absolve Tutm Entertainment and other music producers and sellers of music of their obligation to be completely forthcoming with consumers. The New Jersey Consumer Fraud Act explicitly prohibits any deception, misrepresentation, or knowing concealment intended to be relied on in connection with the sale or advertisement of merchandise.

Articles Tagged with Consumer Protection

Unsuitable Variable Annuity Sales A Continuing Concern for Regulators

Hits of the 80’s and 90’s Sounding Like Fraud: Gana LLP Files Suit Against Producer of Classic Tunes