Transamerica Financial Advisors has agreed to pay $8.8 million in restitution and fines to settle claims that it failed to provide adequate supervision of registered representatives in connection with the sale of variable annuities, mutual funds and 529 plans, according to the Financial Industry Regulatory Authority.
Without admitting or denying the allegations, Transamerica Financial Advisors consented to the entry of FINRA’s findings, FINRA said Monday.
Transamerica Financial Advisors will pay $4.4 million in restitution to about 2,400 customers in connection with findings, and it will also pay a $4.4 million fine.
TFA said in a statement that since the investigation began in 2015, the company has improved the training, guidance, policies and procedures, and oversight of its registered representatives, and that it has improved its disclosures to customers.
Over a six-year period from May 1, 2010, through May 15, 2016, Transamerica Financial Advisors used a system for supervising variable annuity sales and exchanges that was deficient, FINRA said.
Transamerica Financial Advisors failed to detect that some of its representatives made “thousands of misstatements to customers in recommending variable annuity exchanges, understating the benefits of the existing variable annuity, and overstating the benefits of the new variable annuity,” FINRA said.
From Jan. 1, 2009, through Nov. 15, 2016, Transamerica Financial Advisors relied on representatives to determine whether sales charge waivers applied to customers’ mutual fund purchases, and the firm failed to provide guidance to representatives to help them make this determination, FINRA said.