Park Avenue Securities is a brokerage firm headquartered in New York New York which has been censured and fined $300,000.00 by Financial Industry Regulatory Authority (FINRA) based upon the firm’s consent to findings that it failed to supervise its annuities operations to ensure that registered representatives made recommendations of annuities in compliance with securities laws and industry rules. Letter of Acceptance Waiver and Consent No. 2015043390301 (Apr. 11, 2018).
According to the AWC, between January 1, 2013 and March 3, 2015, approximately twelve thousand seven hundred thirty-two variable annuity contracts had been sold by Park Avenue. Evidently, Park Avenue sold several classes of annuities during this time frame, including B share annuity contracts that generally contain a seven year surrender schedule, and L share annuity contracts which contain a three to four year surrender schedule but higher fees than B share annuities.
The AWC stated that twenty percent of the annuities sold by Park Avenue throughout the January 2013 and March 2015 time period consisted of L share contracts. Yet, The AWC stated that the sales generated by registered representatives were not adequately supervised by the firm to ensure that the annuities sold by them were suitable for the customers.
The AWC revealed that written supervisory procedures utilized by the firm neglected to detail the considerations of suitability based on the share class involved. Evidently, no training had been provided to the firm’s registered representatives on share class features, surrender penalties and fees. The firm reportedly failed to furnish registered representatives with reasonable data for drawing comparisons between share classes to determine suitability. Further, the AWC stated that no written supervisory procedures had been utilized by the firm that detailed the combination of long-term income riders with differing share classes of annuities.
In addition, FINRA found that the firm failed to utilize surveillance measures to identify if registered representatives effected variable annuity exchanges at inappropriate rates. The AWC revealed that additional multi-class variable annuities training was provided to the firm’s registered representatives after March 3, 2015, at which point fewer L share contracts had been sold to customers in the remainder of 2015. FINRA concluded that the firm’s supervisory failures were violative of FINRA Rules 2010, 3110, 2330 as well as National Association of Securities Dealers (NASD) Rule 3010.
The information contained herein has been obtained from reliable sources however may not be accurate and is not guaranteed by us. Readers are encouraged to undertake their own independent investigation and evaluation of the relevant facts. All claims and allegations are subject to adjudication, decisions may be subject to appeal, and no inference is intended, nor should any inference be made from any information contained herein from any source.
This posting and the information on our website is for general information purposes only. This content should be not considered legal advice, and any responses, comments, e-mails, other communications do not form any attorney client relationship. Attorney Advertisement. See Important Disclaimer
Guiliano Law Group
Our practice is limited to the representation of investors. We accept representation on a contingent fee basis, meaning there is no cost to you unless we make a recovery for you. There is never any charge for a consultation or an evaluation of your claim. For more information, contact us at (877) SEC-ATTY.
For more information concerning common claims against stockbrokers and investment professionals, please visit us at securitiesarbitrations.com
To learn more about FINRA Securities Arbitration, and the legal process, please visit us at securitiesarbitrations.com
