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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 35 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
    Dec 6, 2013 9:53 AM

    Westlake Village, California-based Financial West Investment Group, Inc. AKA Financial West Group submitted a Letter of Acceptance, Waiver, and Consent in which the firm consented to, but did not admit to or deny, the described sanctions and the entry of the Financial Industry Regulatory Authority's (FINRA) findings that it used inaccurate disclosure forms to inform customers of the various features of variable annuities. After reviewing several variable annuity transactions and exchanges, FINRA found that the forms provided to customers to support the firm's disclosures and suitability recommendations contained inaccuracies when compared to the disclosures in the variable annuity prospectuses. Such inaccuracies include discrepancies between the amount of mortality and expense fees; inconsistencies between the surrender schedule, surrender charges, and withdrawal charges; and incorrect total rider and/or benefit fee amounts. As a result, the firm was censured and fined $35,000.

    An annuity is a form of insurance that offers a series of payments for a period of time. Variable annuities are typically higher in risk when compared with other types of annuities and depend on how the stock market is performing. Buyers have the option to allocate the cash invested into different types of assets such as mutual funds, indices, fixed income investments or bonds, and cash. A deferred variable annuity offers investors a way to accumulate savings and defer taxes until money is withdrawn. Most variable annuities do not have principal protection, so investors can lose money if markets deteriorate.

    FINRA also stated that the firm failed to have adequate written supervisory procedures (WSPs) in place to verify that the firm's brokers made accurate disclosures of certain fees and charges in connection with variable annuity transactions. The firm's WSPs required the firm's designated principal and supervisor to review customer applications to determine that the paperwork was in good order and the variable contract was a suitable investment for the client. However, the firm's WSPs failed to require that the firm review the forms in connection with variable annuity transactions to ensure that the forms accurately disclosed certain fees and charges consistent with the respective variable annuity prospectus.

    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. Please see our Instablog profile (left column) for ways to contact us and get answers to any of your questions about this blog post and/or any related matter.

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