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In order to make investors aware of the requirements of FINRA Rule 2330, we have provided the following information, which should be considered for educational purposes only. The information contained in this post should not be considered legal advice. If you have any question relative to your purchase, sale or exchange of a deferred variable annuity, you should contact experienced legal counsel.
All broker-dealers and associated persons dealing with members of the general public must be licensed with the Financial Industry Regulatory Authority, Inc. (FINRA), which has adopted various rules and regulations which its members must comply with. In addition to its general suitability rule, FINRA has adopted product specific suitability rules such as FINRA Rule 2330, which relates to deferred variable annuities. This rule was an outgrowth of various sales practice abuses relating to the purchase and exchange of deferred variable annuities.
FINRA Rule 2330, labeled Members’ Responsibilities Regarding Deferred Variable Annuities, provides generally:Recommendation Requirements
No member or person associated with a member shall recommend to any customer the purchase or exchange of a deferred variable annuity unless such member or person associated with a member has a reasonable basis to believe that the transaction is suitable in accordance with NASD Rule 2310 and, in particular, that there is a reasonable basis to believe that :
Of interest is that this rule requires that the above determinations be documented and signed by the account executive separately from the information contained on the new account documents. It is for this reason that, as an investor, it is of paramount importance that the information that you provide to the account executive is accurate. For if a problem arises, what is contained on these documents has significant value relative to the prosecution of your case.
Moreover, this rules creates a second tier of suitability review. It requires that a registered principal, of the firm, must approve the recommended transaction only if he or she has determined that there is a reasonable basis to believe that the transaction would be suitable based on the factors delineated in the rule. Again, this determination must be documented and signed by the registered principal who reviewed and then approved or rejected the transaction.
However, even if these procedures are allegedly in place and followed, there is still a possibility that, as an investor, you might suffer damages as a result of fraud, misrepresentation or other broker/dealer misconduct relative to the purchase, sale or exchange of a deferred variable annuity.Contact Us
With extensive courtroom, arbitration and mediation experience and an in-depth understanding of securities law, our firm provides all of our clients with the personal service they deserve. Handling cases worth $25,000 or more, we represent clients throughout Florida and across the United States, as well as for foreign individuals that invested in U.S. banks or brokerage firms. Contact us to arrange your free initial consultation.