It was accused of failing to provide full disclosure on conflicts of interest when making in-house referrals and now Houston-based insurance company, Valic Financial Advisors, will pay $1.75 million to a regulator.
The payout was a settlement with the Financial Insurance Regulatory Authority (FINRA) which charged Valic with financially incentivising representatives to convince clients to use Valic’s advisory business, according to a
Financial Advisor report.
The charges against the hybrid firm, which boasts more than $21.7 billion in advisory assets, have now been put to rest.
FINRA alleges that when clients tried taking their money out of variable annuities, representatives directed them to Valic’s fee-based advisors or a fixed index annuity.
The federal financial regulator said they were made aware of irregularities in 2012-2013 when a significant amount of holding was moved from Valic’s variable annuities to its advisory platform.
FINRA also said Valic reps were prevented from recommending any products outside of the Valic portfolio or offered by another company.
According to FINRA, a lack of supervision over selling variable annuities was the primary cause.
Valic, a subsidiary of
AIG, neither confirmed nor denied any of these allegations.
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