Securities Lawyers Blog
The Financial Industry Regulatory Authority (FINRA) sanctioned brokerage firm Great American Advisors, Inc. (Great American) concerning allegations that between December 2006, and December 2007, Great American failed to have an adequate supervisory system for the sale of variable annuities. FINRA alleged that two of the firm’s registered representatives recommended and effected 301 unsuitable variable annuity transactions involving 206 customers causing customers to pay $363,173 in unnecessary surrender fees and incur longer surrender periods.
Great American has been a registered firm with FINRA since 1994. From 1994 through August 2010, the Great American operated as a full service firm selling mutual funds and annuities, among other investment products. Since August 2010, the firm serves as a principal underwriter and distributor for annuity products and has 54 registered representatives.
As a background, a variable annuity is an investment and insurance product with significant risks and features the investor should be aware of before investing. Recently the Securities and Exchange Commission (SEC) released a publication entitled: Variable Annuities: What You Should Know. A variable annuity is a contract with an insurance company where the insurer agrees to make periodic payments to you based upon the chosen investments made in the annuity account. The investment options for a variable annuity are usually a selection of a group of mutual funds.