FAQ | Securities Disputes
Frequently Asked Questions:
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Variable Annuities
According to the NASD: "The variety of features offered by variable annuity products can be confusing. For this reason, it can be difficult for investors to understand what's being recommended for them to buy - especially when facing a hard-charging salesperson." Variable annuities offer a lot of costly features that are unnecessary for most investors and can reduce the return on investment. Variable annuity charges include: surrender charges, administrative charges, mortality and expense risk charges, and investment advisory fees. For many investors, particularly elderly ones, a variable annuity is a poor investment choice that can expose them to unnecessary market risk.
Variable annuity investments are particularly unsuitable for customers that have one or more of the following characteristics:
- Are elderly;
- Have a low risk tolerance;
- Need access to cash or require income;
- Do not need or want the available death benefit; or
- Already have adequate life insurance coverage prior to purchasing the annuity
Auction Rate Securities
Investigations are currently in progress regarding alleged securities fraud in connection with the sale of Auction Rate Securites (ARS) by a number of major broker-dealers for misrepresentations about the liquidity and risks of the ARS to individual investors and corporations by labeling these securities as "cash equivalents."
