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FINRA Disciplinary Action Against Great American Advisors, Inc.

In July 2014, FINRA announced that Great American Advisors, Inc. submitted a Letter of Acceptance, Waiver and Consent in which the firm was censured and fined $100,000. Without admitting or denying the findings, the firm consented to the sanctions and to the entry of findings that it failed to have an adequate supervisory system for the sale of variable annuities.

The findings stated that as a result, two of its independent contractor registered representatives recommended and effected unsuitable variable annuity transactions involving firm customers. The independent contractor registered representatives and the firm improperly earned commissions and caused customers to pay $363,173 in unnecessary surrender fees and incur longer surrender periods. The firm noted a high number of variable annuities replacement transactions by one of these representatives in which the customers had held the prior annuity for only two to three years. The firm began an internal review of the replacements and required the representatives to provide information about the annuity replacements, including details about the high volume of replacement transactions, records of the transactions and copies of sales materials used. The firm suspended all variable annuities replacement transactions by the two representatives during its compliance department’s internal investigation.

According to the findings, the firm’s written procedures generally addressed suitability considerations related to variable annuities sales. However, the firm did not have an adequate supervisory system to ensure that the procedures were properly implemented. The firm failed to ensure that the sales of the variable annuities by these representatives adhered to its written procedures. The supervisors approved variable annuities replacements based on limited firm systems and with inadequate written guidance, computer systems and surveillance tools. One of the representatives underreported surrender fees on replacement transactions, and the firm did not check or verify the correct surrender fees. The firm also did not have a system or Web-based access to a database that allowed it to adequately compare the annuity to be replaced with the other variable annuities.

It was unclear from FINRA’s announcement whether customers had initiated FINRA arbitrations or any other type of securities arbitrations.  If you believe that you have suffered losses as a result of Great American Advisors, Inc.’s misconduct, you may contact David A. Weintraub, P.A., 7805 SW 6th Court, Plantation, FL 33324.  By phone:  954.693.7577 or 800.718.1422.