Investigators participating in a nationwide sweep appear to be finding specific problems with the methods used to sell annuities to senior citizens and pre-retirees.
Mary Ann Gadziala, associate director of the Office of Compliance Inspections and Examinations at the U.S. Securities and Exchange Commission, gave investment industry compliance professionals a glimpse of the SEC’s thinking here in October, during a speech at a meeting of the National Society of Compliance Professionals, Cornwall Bridge, Conn.
SEC Chairman Christopher Cox and Patricia Struck, president of the North American Securities Administrators Association, Washington, announced in May that their organizations were teaming up with state regulators and self-regulatory organizations to look at the activities of broker-dealers, investment advisors, investment companies and other organizations in communities where there are large numbers of retirees.
The SEC is conducting “almost 90″ suitability examinations related to the investigation at broker-dealers in Alabama, Arizona, Florida, North Carolina and Texas, Gadziala said, according to a written version of her remarks.
Many of the SEC’s general sales practice and suitability exams also will key in on sales to senior citizens, Gadziala said.
“While we are still in the early stages of the examination process, we have already seen concerns with advertising and marketing materials, and have seen particular problems with the sale of variable annuities and equity indexed annuities,” Gadziala warned.
The SEC also wants compliance officials to take extra care when monitoring sales of 529 college savings plans, illiquid securities and initial public offering securities, Gadziala said.