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Robert W Pearce
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Mr. Pearce has tried, arbitrated and mediated numerous disputes involving complex securities, commodities, administrative, contract, commercial, business tort and employment law issues for over 30 years. He has represented hundreds of clients in Federal and state courts (trial and appellate) as... More
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The Law Offices of Robert Wayne Pearce, P.A.
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The Investor's Rights Law Blog
    Jan 11, 2013 11:22 AM

    California insurance agent Glenn Neasham has been convicted of a felony and ordered to serve 90 days in jail for selling an equity-indexed annuity to an 83-year-old woman with dementia. Bank officials notified California's adult protection officials when the 83-year-old and a "male friend" were looking to withdraw $175,000 from her bank to buy an annuity. Bank officials also mentioned that the 83-year-old appeared confused and influenced by her male companion.

    An annuity is a form of insurance that offers a series of payments for a period of time. An annuity can be either fixed or variable. Fixed annuities are invested in conservative investments, and the return to investors may vary, but a minimum rate of return is established. Variable annuities are higher in risk when compared to fixed annuities and depend on how the stock market is performing. Variable annuity buyers have the option to allocate the cash invested into different asset classes such as mutual funds, indices, fixed income investments or bonds, and money market.

    Equity-indexed annuities are complex products that are hybrid of both fixed and variable annuities. Their returns vary more than a fixed annuity, but not as much as a variable annuity. So, equity-indexed annuities are more risky than fixed annuities, but less risky than a variable annuity. Equity-indexed annuities offer a minimum guaranteed interest rate combined with an interest rate linked to a market index. Because of the guaranteed interest rate, equity-indexed annuities have less market risk than variable annuities. Equity-indexed annuities also have the potential to earn returns better than traditional fixed annuities when the stock market is rising. Equity-indexed annuities come with fees that are higher than any investment, and sales commissions to brokers can go as high as 12%. Surrender charges can go as high as 18%.

    At the trial, the district attorney presented evidence that the 83-year-old was not mentally competent to agree to the purchase, and Mr. Neasham knew this all along. The district attorney also presented evidence of the $14,000 or 8% sales commission and how it played into Mr. Neasham's criminal intent. The 83-year-old was too ill to appear at the criminal trial. In addition, Allianz agreed to waive any surrender charges and return the principal invested with interest.

    Have you suffered a loss of principal in your equity-indexed annuity? 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,, post a comment, call (800) 732-2889, or email Mr. Pearce at for answers to any of your questions about this blog post and/or any related matter.

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