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FINRA Disciplinary Action against Securities America, Inc.

On September 7, 2018, FINRA issued a Letter of Acceptance, Waiver and Consent in which Securities America (SA) was censured and fined $175,000.  Without admitting or denying the findings, the firm consented to the sanctions and to the entry of findings that it failed to establish, maintain and enforce a supervisory system and written procedures designed to ensure that representatives’ recommendations of variable annuities complied with applicable securities laws and regulations.

According to the investigation, during the relevant period (August 2014 – January 2018), Securities America’s procedures did not specifically address the suitability issues concerning fees and costs or surrender periods of different variable annuity share classes.  Additionally, the Firm failed to adequately trained its representatives and reviewing principals to ensure that they understood the material features of variable annuities.

Per the Letter of Acceptance, Waiver and Consent, the firm failed to identify the pattern of red flags presented by the sale of L-share contracts with long-term income riders.  During the investigation period, the firm received approximately $53 million from the sale of variable annuities, including around $6.6 million from the sale of L-share contracts.  Considering the significant role that these transactions played in SA overall business, the firm failed to implement a supervisory system and procedures reasonable designed to ensure suitability in multi-share class variable annuity sales, including L-share contracts.

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 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.