NASD Slams AmEx With $350K VA Sales Fine
December 16, 2002
American Express Financial Advisors has to cough up $350,000 in fines to the NASD after the firm was accused of inadequate disclosure related to variable annuity sales. The misconduct is alleged to have occurred over a 30-month period ending in 2000.
The regulatory body found that some of American Express's registered representatives sold variable annuities with inadequate disclosure about costs and benefits. Furthermore, it also found fault with the company's establishment, maintenance and enforcement of supervisory policies regarding the sale of variable annuities and variable life insurance.
The action is part of a concerted effort on the part of the NASD to crack down on faulty sales practices of variable products. In June, NASD officials announced at the National Association for Variable Annuities' Regulatory Affairs Conference that the agency would likely come out with enforcement actions by the end of the year.
"We will continue to focus on variable annuity sales practices through guidance to investors, notices to broker/dealers and enforcement actions, to ensure that variable products are sold in an appropriate manner. We continue to see instances of abusive sales practices and suitability problems with variable annuities," said Mary L. Schapiro, vice chairman and president of regulatory policy and oversight at the NASD.