The Investor’s Watchdog

The Investor's Watchdog

Woodbury Financial Services agrees to $225,000 Fine to Resolve Allegations of Failing to Detect Suitability of Additions to Existing Variable Annuities

Wednesday, May 29, 2019

On May 13, 2019, the Financial Industry Regulatory Authority (FINRA) Department of Enforcement approved a Letter of Acceptance, Waiver and Consent (AWC) submitted by Woodbury Financial Services, Inc. (Woodbury) to resolve allegations that the firm failed to maintain a reasonably designed system for supervising additions to existing variable annuities. As of April 2019, Woodbury had over 2,000 registered representatives in 1,171 branch offices.

According to the AWC, Woodbury’s supervisory system was not reasonably designed to detect suitability issues relating to existing variable annuities among other issues. The suitability issue alone allowed individual customers to make additional investments of $25,000 or more in existing variable annuity contracts on over 3,800 transactions from June 2013 to June 2015. FINRA claims that Woodbury did not review additions resulting from recommendations to invest additional funds in the existing variable annuity contracts, as required by FINRA and NASD Rules. At the time, Woodbury relied on a general periodic branch audit process and an unrelated process for reviewing commission payments over $50,000 to supervise additions not funded by an exchange. According to the AWC, this method does not meet supervisory standards set forth by the securities industry regulators.

Based on the foregoing, Woodbury violated NASD Rule 3010 and FINRA Rules 3110 and 2010. Woodbury agreed to a censure and $225,000 fine to resolve these allegations.

If a firm did not properly supervise its brokers, the firm can be held liable for money lost. If you lost money while investing at Woodbury Financial Services, Inc. and you suspect wrongdoing, you may be able to recover from the firm or an associated broker. Since 1998, the attorneys at ChapmanAlbin have been representing victims of investment fraud and broker misconduct. Call us (1-877-410-8172) today for a free, no obligation consultation.

 

Author: Jason T. Albin

Jason Albin is an Attorney and Partner at ChapmanAlbin, the investor rights law firm. He has represented hundreds of investors who have lost money due to broker misconduct, unsuitable investment advice and fraud.​ Jason also represents individuals in “whistleblower” suits filed against unscrupulous companies that try to defraud the US federal and state governments.

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