California Agency Raids VA Broker-Dealer Offices
California securities regulators have started an “extremely rare sweep” of the 3,409 broker-dealer offices overseen by the state in an effort to determine if variable annuities are being sold inappropriately to elderly and unsophisticated investors.
The raid was prompted by an investigation and subsequent legal action against a Texas insurance company and a California broker that the state securities regulators allege operated a so-called “living trust mill.” The brokers who operate the mills invite seniors to hear free advice about living trusts “when in fact they push seniors to unknowingly purchase annuities, many of which are unsuitable,” regulators say.
Officials at the California Department of Corporations, the agency conducting the sweep, say the raid was conducted against the background of the recent crackdown by the U.S. Securities and Exchange Commission and NASD on unsuitable sales of variable annuities.