Beware- Variable Annuities - Regulator Crackdowns

In 2005, the NASD says its continued focus on the sale of variable annuities and variable life products resulted in the filing of 88 cases in 2005!! One of the 88 cases involved Waddell & Reed, in which the firm agreed to pay a $5 million fine and $11 million in restitution to injured customers for engaging in a campaign to exchange the variable annuity contracts of thousands of customers without regard to the suitability of those switches. Details of this case at the NASD website at http://www.nasd.com/PressRoom/NewsReleases/2005NewsReleases/NASDW_013886

From www.onlinelawyersource.com
Massachusetts announced in early August 2005 after state regulators applied pressure that Bank of America agreed to allow customers who were 78 years or older when they were sold a variable annuity in 2003 and 2004 to get a refund. In response to the Bank of America action, it was predicted that other financial services would also be forced to offer the same type of opportunity to their customers.
New Jersey, California and a number of other states have implemented laws that would increase the oversight and scrutiny of some annuity sales. In July 2005, New Jersey began enforcing its Senior Citizen Investment Protection Act, which limits how long annuity sellers can impose surrender charges. The state became the third state, alongside Utah and Washington, to limit to no more than 10 years the length of time insurers can impose surrender charges.
California officials have received so many annuity complaints that high-ranking government officials are pushing legislation that would impose additional regulation or oversight of annuity sales. Missouri officials are also pushing for similar actions.