FINRA Hits Woodbury With Fine Over Annuity-Related Failures

The findings stated that the firm didn't review additions resulting from recommendations to invest additional funds in existing variable annuity contracts, either before or after the transaction, unless the addition was funded via the proceeds of an exchange. Woodbury also didn't use surveillance tools, including exception reports, to monitor additions to variable annuities and provide the firm with information about potentially unsuitable transactions, FINRA said.

The firm's review system, meanwhile, didn't provide itself with sufficient information to permit it to concentrate on "areas of variable annuity additions or patterns of additions at the firm that posed the greatest numbers and risks of potential suitability violations, including additions resulting in customers investing a high concentration of their net worth in variable annuities," according to FINRA.

Until a change in Woodbury's ownership resulted in changes in its transaction review systems after the relevant period, the firm relied on a general periodic branch audit process and an unrelated process for reviewing commission payments in excess of $50,000 to supervise additions not funded by an exchange, which were the vast majority of variable annuity additions, according to FINRA. But "neither the branch audit process nor the large commission review process were reasonably designed to provide sufficient information about potentially unsuitable additions," FINRA said.

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