The Financial Industry Regulatory Authority has taken disciplinary action in connection with allegations of inappropriate sales of variable annuities.
FINRA, Washington, has imposed a $1.75 million fine on Fifth Third Securities Inc., a unit of Fifth Third Bancorp, Cincinnati.
Fifth Third Securities has neither admitted nor denied the charges, but it has agreed to accept FINRA’s findings.
“We are pleased to have this matter behind us,” Fifth Third says in a statement. “It generated from a broad industry-sweeping review of variable annuity sales practices.”
FINRA charges that 42 Fifth Third Securities brokers made 250 unsuitable sales and exchanges involving 197 customers.
Fifth Third Securities’ supervisory systems and procedures were inadequate for policing the firm’s VA sales and exchanges, FINRA says.
FINRA has ordered Fifth Third Securities to pay about $260,000 to 74 customers to compensate them for surrender charges they incurred in connection with the VA contracts involved in the disciplinary proceedings.
Fifth Third Securities also must offer the 197 customers involved the option of rescinding the challenged contracts and getting their money back, along with interest and any surrender charges incurred except for any withdrawals, FINRA says.