The Financial Industry Regulatory Authority said Tuesday that it has fined Fifth Third Securities, Inc., $4 million and required the firm to pay approximately $2 million in restitution to customers for failing to appropriately consider and accurately describe the costs and benefits of variable annuity exchanges.
Fifth Third also recommended exchanges “without a reasonable basis to believe the exchanges were suitable,” FINRA said.
FINRA found that Fifth Third failed to ensure that its registered reps obtained and assessed accurate information concerning the recommended VA exchanges, and that the BD’s registered reps and principals were not adequately trained on how to conduct a comparative analysis of the material features of the VAs.
As a result, “the firm misstated the costs and benefits of exchanges, making the exchange appear more beneficial to the customer,” FINRA states.
Susan Schroeder, FINRA’s executive vice president and head of enforcement, said that FINRA remains vigilant in examining how member firms market variable annuities, which are “complex products pitched to retirees and people saving for retirement.”
By reviewing a sample of VA exchanges that the firm approved from 2013 through 2015, FINRA states that it found that Fifth Third misstated or omitted at least one material fact relating to the costs or benefits of the VA exchange in approximately 77% of the sample.