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November 05, 2006 at 02:00 PM
The Securities and Exchange Commission is finding a “particular problem” with advertising and marketing materials associated with the sale of variable annuities and equity indexed annuities to retirees and near-retirees as it continues with suitability exams of broker-dealers in several states with large retirement communities.
The exams are part of an increased agency focus “on sales and marketing of securities products to senior citizens and those in the pre-retirement stage, where suitability and marketing must be carefully monitored,” said Mary Ann Gadziala, associate director at the Office of Compliance Inspections and Examinations at the SEC, in comments to compliance professionals Oct. 19.
At the same time, she said, the agency is revising its compliance and examination systems to not only focus on sales and marketing of securities products to senior citizens and those in the pre-retirement stage, but also to “anticipate potential compliance challenges.”
Another new focus in examinations is on money laundering, the official said.
She articulated the agency’s examination priorities in comments “Broker-Dealer Examination and Compliance Developments” Oct. 19 before the national meeting of the National Society of Compliance Professionals.
Regarding money laundering, Gadziala said that “not only is the anti-money laundering program important in combating terrorist financing, but there always seem to be new rules and nuances to address the clever new activities of those who would abuse our financial system for nefarious purposes.”
The problems with the advertising and marketing materials are being discovered as the agency conducts “almost 90″ suitability examinations at broker-dealers in Florida, California, Texas, Arizona, North Carolina and Alabama–states with large retirement communities,” she said.
“We expect that many of our general sales practice and suitability exams in our program nationwide will key in on sales to senior citizens, as well,” she said, noting that rules relating to sales, suitability, and supervision “are areas of focus.”
