During the first few years of this decade, much of the news coverage regarding variable annuity (VA) products focused on predatory sales to seniors. The market decline following the collapse of dot.com companies resulted in greater attention to these sales practices as many seniors lost their retirement nest egg and many filed suit before the Financial Industry Regulatory Authority (FINRA) (formerly NASD). In the wake of the controversy, the insurance industry implemented changes to address these concerns and to better document the sale of VA generally.
With the recent economic downturn, however, we are bound to see a new wave of claims brought by disappointed VA purchasers. It is our understanding that FINRA is gearing up to handle an increase in case filings. New FINRA case filings are up 65 percent over this time last year. The number of claims filed through August 2009 mirrors the total number of cases filed in all of 2008. These cases include a noticeable increase for negligence, breach of contract, breach of fiduciary duty, unsuitability, misrepresentation, and failure to supervise claims. These numbers suggest that the economic downturn has caused VA purchasers to bring more claims, hoping to recoup their failed investments through litigation.
Should you or your company find yourself subject to a claim before FINRA, it is important to seek counsel that is skilled in handling these claims. Your best chance to protect yourself against the coming wave of claims is to find advisors with the knowledge and the experience to help you navigate these difficult times.