Claris Law Legal Blogging Community

Editor: Debra G. Speyer, Esq.
Profession: Attorney

Category: Investment Mismanagement

The brokerage firm David Lerner Associates Inc. was fined $400,000 and was suspended by the NASD for one month from doing new business in variable life and variable annuities for violating securities rules regarding replacement sales of annuities. My law firm has brought many arbitration actions against brokerage firms for switching individual investors into annuities and for placing investors into unsuitable annuities.

Annuities are very high commissioned investment products. Sometimes unscrupulous brokerage firm will tell a client to replace an annuity with a new annuity. Sometimes there is a legitimate reason to make the switch but often it is just to obtain a new commission. Annuities often have long surrender periods and high surrender fees. Annuities can be a very appropriate investment vehicle, however consumers must be careful in understanding what they are purchasing. The NASD has some outstanding investor protection publications about annuities which are available on the NASD website.