Financial companies advertise annuities as safe investments for retirement, but they carry risks and the potential for fraud. At Oakes & Fosher, our experienced annuity fraud lawyers are committed to protecting your rights and helping you recover from investment fraud.
What is Annuity Fraud
Annuity fraud occurs when financial advisors or brokers deceive investors about the nature, benefits, or risks associated with annuities. This deception can lead to significant financial losses, particularly for those relying on these investments for their retirement. Common forms of annuity fraud include:
- Churning: Excessive trading to generate commissions. Brokers can trade annuities in your portfolio many times to make commissions, even if it doesn’t help your investment. This means they may buy and sell annuities frequently, regardless of whether it is in your best interest. These trades are done to earn commissions for the broker, rather than to benefit your investment.
- Unsuitability: Recommending inappropriate annuities for the investor’s profile. For instance, a broker might push a long-term annuity to an elderly investor who may need quick access to funds.
- Misrepresentation: Providing false or misleading information about the annuity. This could involve overstating the potential returns or understating the risks and fees associated with the annuity.
- Switching: Advising unnecessary switches between annuities for commission benefits. Brokers might recommend moving funds from one annuity to another without any real benefit to the investor, solely to earn additional commissions.
Types of Annuities
Fixed Annuities
Fixed annuities operate like high-interest savings accounts, offering a guaranteed return based on a fixed interest rate. They are suitable for conservative investors who prefer predictable income. The interest rate is agreed upon at the time of purchase, ensuring a stable and reliable income stream during retirement.
Variable Annuities
Variable annuities involve investments in stocks and bonds, leading to returns that vary with market performance. While they offer the potential for higher returns, they also carry greater risks. The value of the annuity can fluctuate based on the performance of the underlying investments, which means that the income you receive during retirement could be less than expected if the market performs poorly.
Equity Indexed Annuities
Equity indexed annuities combine features of fixed and variable annuities, linking returns to an equity index like the S&P 500. They promise higher returns without risking the principal but often come with high fees and complex terms. While they can offer attractive growth potential, the fees and penalties associated with these annuities can significantly reduce the actual returns.
FINRA Arbitrations and Annuity Fraud
The Financial Industry Regulatory Authority (FINRA) oversees the arbitration process for resolving disputes between investors and brokers or brokerage firms. If you believe you have been a victim of annuity fraud, FINRA arbitration can be an effective way to seek compensation. The process involves:
- Filing a Claim: Submitting a detailed account of the fraudulent activity. This includes providing evidence such as account statements, communication records, and documentation of the transactions in question.
- Discovery: Both parties exchange relevant information and documents. This phase allows both sides to gather the necessary evidence to support their claims.
- Hearing: Presenting evidence and arguments before a panel of arbitrators. Both the investor and the broker present their case, and witnesses may be called to testify.
- Award: The arbitrators issue a binding decision on the case. If the decision is in favor of the investor, the award could include compensation for financial losses, legal fees, and other related costs.
How to Avoid Annuity Fraud
Do Your Research
Before investing in an annuity, thoroughly research the product and the company offering it. Understand the terms, fees, and potential returns. Be cautious of brokers who pressure you into quick decisions. Look for reviews, regulatory actions, and any past complaints against the company or the broker.
Ask Questions
Don’t hesitate to ask your broker detailed questions about the annuity. Ensure you understand how it works, the risks involved, and why it suits your financial goals. Reach out to an Oakes & Fosher annuity fraud lawyer to answer any of your questions. Some key questions include:
- What are the fees and penalties associated with this annuity?
- How does this annuity fit into my overall financial plan?
- What are the surrender charges if I need to withdraw my money early?
- How is the interest rate or return calculated?
Verify Credentials
Check the credentials of your broker or financial advisor. Ensure they are licensed and have a clean disciplinary record with FINRA or the SEC. You can verify this information and insurance companies through FINRA’s BrokerCheck tool or the SEC’s Investment Adviser Public Disclosure database.
Get a Second Opinion
Consider consulting with an independent financial advisor to verify the suitability of the annuity for your investment portfolio. An unbiased opinion can help you avoid products that are not in your best interest.
What to Do If You Suspect Annuity Fraud
If you suspect you’ve been a victim of annuity fraud, it’s essential to take immediate action:
- Document Everything: Keep detailed records of all communications and transactions with your broker. This includes emails, letters, account statements, and notes from conversations.
- Contact Your Broker: Sometimes, a direct conversation can resolve misunderstandings or provide clarification. Request a detailed explanation of any transactions you don’t understand.
- Reach Out to the Firm: If your broker is unhelpful, contact their company’s compliance department. They may be able to address your concerns and rectify the situation.
- File a Complaint with FINRA or the SEC: If you’re still not satisfied, you can file a formal complaint. These regulatory bodies can investigate and take action if they find evidence of fraud.
- Seek Legal Assistance: Consult with an annuity fraud lawyer. An experienced annuity fraud attorney can help you navigate the legal process, gather evidence, and represent your interests in arbitration or court.
Why Choose Oakes & Fosher?
At Oakes & Fosher, we specialize in securities fraud, including annuity fraud. Our attorneys have extensive experience in handling complex annuity fraud cases and have successfully recovered substantial damages for our clients. We understand the legal duties of brokers and brokerage firms and know how to build a strong case on your behalf.
- Free Consultation: We offer a free initial consultation to discuss your case and evaluate your broker’s conduct.
- Thorough Investigation: Our team conducts a detailed investigation to gather evidence of fraud. This includes analyzing transaction records, communications, and financial statements.
- Expert Representation: We represent you in negotiations, arbitration, or court, fighting for the compensation you deserve. Our goal is to ensure you receive full restitution for your losses and any additional damages.
Contact Our Annuity Fraud Lawyers Today
If you suspect you’ve been a victim of annuity fraud, don’t wait to seek help. Contact Oakes & Fosher for a free consultation. Our dedicated annuity fraud lawyers are here to protect your rights and help you recover your losses.