State securities regulators may be witnessing fewer problems with variable annuity sales, but they are continuing to see violations in certain areas of supervision at broker-dealers. This concern results from a review of 236 exams conducted during the first half of 2012. Regulators at the state level are worried that problems are arising as compliance resources at brokerage firms have been squeezed. Unfortunately, without a sufficient flow of resources going towards compliance, this trend will most likely continue.
The review conducted revealed the five most popular violations: 1) failure to follow written supervisory policies; 2) suitability; 3) correspondence/email; 4) maintenance of customer account information; and 5) internal audits. States found violations with written supervisory procedures in 24% of exams where such issues were reviewed - only 20% of the time when suitability was reviewed.
"We are concerned about [broker-dealers] having enough staff to service regulatory inquiries and [provide] customer service," said William Riley, special assistant to the director of Florida's Office of Financial Regulation. Mr. Riley added that "it is a concern, with the staff reductions at firms", and that "firms also are skimping on exception reports they buy from their clearing firms."
Industry compliance personnel have been warned by the Florida regulator to make sure they speak with customers who have a complaint, rather than just their broker. This would require branches to beef up branch audits and to follow up to make sure problems are taken care of. In many cases, no meaningful branch audits are being conducted.
On a good note, variable annuity violations have decreased since a similar review conducted in 2010. Only two years ago, variable annuity violations were third on the list of violations. This year, variable annuity violations fell to ninth place. This is probably due to the fact that variable annuity sales have substantially slowed within the last three or four years.
Have you made a complaint to your financial advisor or broker-dealer that has not yet been addressed? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation.
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 30 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.
The review conducted revealed the five most popular violations: 1) failure to follow written supervisory policies; 2) suitability; 3) correspondence/email; 4) maintenance of customer account information; and 5) internal audits. States found violations with written supervisory procedures in 24% of exams where such issues were reviewed - only 20% of the time when suitability was reviewed.
"We are concerned about [broker-dealers] having enough staff to service regulatory inquiries and [provide] customer service," said William Riley, special assistant to the director of Florida's Office of Financial Regulation. Mr. Riley added that "it is a concern, with the staff reductions at firms", and that "firms also are skimping on exception reports they buy from their clearing firms."
Industry compliance personnel have been warned by the Florida regulator to make sure they speak with customers who have a complaint, rather than just their broker. This would require branches to beef up branch audits and to follow up to make sure problems are taken care of. In many cases, no meaningful branch audits are being conducted.
On a good note, variable annuity violations have decreased since a similar review conducted in 2010. Only two years ago, variable annuity violations were third on the list of violations. This year, variable annuity violations fell to ninth place. This is probably due to the fact that variable annuity sales have substantially slowed within the last three or four years.
Have you made a complaint to your financial advisor or broker-dealer that has not yet been addressed? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation.
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 30 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.
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