American Skandia Sued Over Tax-Deferred VAs In IRAs
A New York law firm has filed a class-action suit in U.S. district court against American Skandia Life Insurance Company, Shelton, Conn., and its affiliates, charging the company inappropriately sold tax-deferred variable annuities to individual and group retirement plans.
The lawsuit, Donovan v. American Skandia Life Assurance Corporation et al, was filed by Wolf Haldenstein Adler Freeman & Herz LLP in December in the U.S. District Court for the Southern District of New York.
The action was brought on behalf of Diane C. Donovan and an unspecified number of other investors who bought tax-deferred VAs from American Skandia for their retirement plans from Dec. 13, 1997 through Oct. 22, 2000, according to papers filed with the court.
The suit charges American Skandia violated the Securities Act of 1933 and other federal statutes by making misleading statements and omissions in promoting sales of its VAs. The alleged misstatements included an assertion that tax-deferred VAs were suitable for tax-deferred retirement accounts, Wolf Haldenstein says.
“Deferred annuities have no place in tax-deferred retirement accounts such as IRAs and 401(k)s, which already have these very same tax benefits,” the suit charges.