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FINRA Investigates B-Ds That Sold Variable Annuities With Investments in Hedge Funds

After clients saw $18 million in financial losses tied to variable annuities with subaccounts invested in hedge funds, the Financial Industry Regulatory Authority (FINRA) wants answers from the broker/dealers behind the sales.

As reported Dec. 5 by Investment News, the variable annuity was issued by Sun Life Financial Inc., while the two hedge funds were the Foresee Strategies Insurance Fund and the Foresee Strategies 3(c)(1) Insurance Fund LP. Both funds were related to a group called the SALI Multi-Series Fund LP.

The broker/dealers facing FINRA arbitration complaints from investors regarding the Sun Life annuities include: Geneos Wealth Management Inc., Lincoln Financial Network, National Planning Corp., SagePoint Financial Inc. and FSC Securities Corp.

Another broker/dealer that sold the product reportedly has been shut down.

Last week, a FINRA arbitration panel issued a $284,000 award to a SagePoint client, Phillip Sherrill, who filed a claim against the firm one year ago. In his complaint, Sherrill alleged actions of unsuitability, common law fraud, breach of fiduciary duty and negligence related to investments in the SALI Multi-Series Fund and the SALI Multi-Series Fund 3(c) (1) LP.

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