Many lawsuits and arbitration proceedings involve claims related to the sale of annuities (particularly variable annuities) variable life insurance, and other insurance-related products. Mr. Betts has extensive experience with the handling these claims, and is knowledgeable about the federal and state laws that apply to transactions involving annuities and insurance. The legal theories that can be employed in the pursuit of these cases may include claims under the federal securities laws, including Section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. §§ 78a et seq., and Rule 10b-5, and state statutory and common law claims, such for violations of the Pennsylvania Unfair Trade Practices and Consumer Protection Law, 73 P.S. §§ 201-1, et seq., fraudulent and negligent misrepresentations and nondisclosures, and breach of fiduciary duties.
In recent years, a high percentage of the claims related to insurance and annuity products generally have related to variable annuities. Variable annuities are complex products that are not readily understood by many investors. Claims related to variable annuities can be based on various forms of alleged misconduct by brokers and agents, including:
- Misrepresentations – investors often allege that they were induced to purchase variable annuities, in reliance on misrepresentations fraudulently or negligently made by brokers or agents about the terms of the annuities, or because of nondisclosures.
- Churning/Twisting/Switching/Replacement – investors may allege that a variable annuity that replaced a previously-purchased annuity was recommended to generate additional commissions for a broker and his/her firm.
- Unsuitability – a fundamental duty of a broker is to recommend suitable products, and many cases involve situations where brokers are alleged to have sold a variable annuity that was not suitable for the investor, particularly when the client is a senior.
This FINRA Investor Alert discusses many of the issues related to variable annuities of which investors should be aware when considering the purchase of a variable annuity.