AAG Capital has been fined $100,000 by the Financial Industry Regulatory Authority (FINRA) for failing to establish and maintain adequate supervisory systems and written policies related to the sale of complex annuity products.
AAG Capital Fined $100k by FINRA
The Florida-based brokerage firm was also ordered to pay $38,591.39 in restitution to affected customers and undertake corrective measures.
According to FINRA, between February 2021 and the present, AAG Capital did not implement a system reasonably designed to comply with Regulation Best Interest (Reg BI) when recommending registered index-linked annuities (RILAs) to retail clients.
The regulator explained that the firm’s procedures failed to account for potential customer disadvantages, such as surrender charges or the loss of valuable insurance benefits when exchanging existing policies for RILAs.
Furthermore, FINRA found that 19 of 41 exchanges involved clients giving up living or death benefits or incurring surrender charges.
“Six customers gave up life insurance policies with a death benefit valued more than the surrender value of the contract, in some cases by over $100,000,” said FINRA.
AAG Capital consented to the sanctions without admitting or denying the findings. It must certify within 180 days that it has addressed the deficiencies and put new supervisory systems in place.
“As of June 30, 2020, broker-dealers and their associated persons are required to comply with Reg BI under the Securities Exchange Act of 1934,” said FINRA.
