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Voya Financial to Pay $2.75 Million for Variable Annuity Supervisory Failures

Voya Financial Advisors, Inc. of Des Moines, Iowa submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Financial Industry Regulatory Authority (FINRA) for failing to adequately supervise the sales of variable annuity L-shares.  Voya Financial Advisors (Voya Financial) was subject to a similar FINRA disciplinary action in 2015 which alleged the firm failed to supervise the sales of Unit Investment Trusts (UITs).

Registered with FINRA since 1968, Voya Financial, f/k/a ING Financial Partners, Inc., currently has 2,779 registered representatives and 1,485 branch offices.  FINRA found that from July 2012 to August 2014, Voya failed to establish, maintain, and enforce a supervisory system to identify red flags in the sale of variable annuity L-shares.  Further, FINRA found that Voya failed to provide its registered representatives with adequate training and guidance on suitability considerations for these multi-share class variable annuities.  According to FINRA, the L-share annuities are a complex investment product that is only suitable for a narrow class of investors and that Voya allegedly failed to provide its advisors with reasonable guidance to discern this class of investor.

FINRA noted that during the relevant time period, Voya approved 1,315 L-share variable annuity contracts with a long-term income rider, an investment which has conflicting time horizons.  In 70% of Voya’s 1,315 L-share contracts sold, the customer purchasing it had a long-term investment horizon of over seven years.  This fact was a red flag that a different investment with lower fees would be more suitable for the customer.  FINRA alleges that Voya failed to identify and investigate these red flags.  Without admitting or denying the FINRA findings, Voya Financial was ordered to pay a $2.75 million fine.

FINRA rules require brokerage firms to establish and implement a reasonable supervisory system to protect customers from the risks associated with investing. The implementation of the rules requires supervisors to monitor their employees to ensure compliance with federal and state securities laws, securities industry rules and regulations, as well as the brokerage firm’s own policies and procedures. If broker-dealers and their supervisors fail to establish and implement these protective measures, they may be held liable to account holders for investment losses which stem from their employees’ misconduct. Therefore, investors who have suffered losses due to a brokerage firm’s failure to supervise the unsuitable recommendations of its representatives can bring forth claims to recover damages against firms, like Voya Financial, which have a duty to supervise employees in order to protect their customers’ interests.

Have you suffered losses in your Voya Financial account due to an unsuitable variable annuity investment?  Did your stockbroker make an unsuitable recommendation that doesn’t fit with your investment objectives?  If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation. Mr. Pearce is accepting clients with valid claims against Voya Financial stockbrokers who may have engaged in misconduct and caused investors losses.

The most important of investors’ rights is the right to be informed!  This Investors’ Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida.  For over 35 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues.  The lawyers at our law firm are devoted to protecting investors’ rights throughout the United States and internationally!  Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.