Talk about a proactive regulator!
California's insurance commissioner had independent insurance agent Glenn Neasham arrested for selling a complex annuity to an 83 year old woman. The jury in Lake County, CA, found the lady had dementia and convicted the broker of felony-theft and ordered him to spend 90 days in jail, according to a recent Wall Street Journal article.
Steve Poizner, the former insurance commissioner was quoted as saying agents "who steal from vulnerable seniors will not get away with their shameful tricks".
We have warned investors to be wary when making annuity purchases for many years given the fact that there are often steep penalties if money is withdrawn early. Some annuities define "early" as a decade or more. In addition commissions on indexed annuities are very high, sometimes 12% or more.
In the case cited, the broker earned a $14,000 commission (8%) and the penalty to pull the money out of the annuity in the first year was 12.5%.
We are not aware of another case where the regulators have taken such a strong stance. Perhaps this will have some chilling effect on the sale of these products to the elderly, however you can't ask too many questions about the suitability of any annuity proposed to you by your broker.
If you have questions about the way your brokerage account is being handled or have unexplained losses in your stock market account, please do not hesitate to contact us at 561 391 1900. We have been helping investors nationwide recover stock-market and investment losses for over twenty years.
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