Variable Annuity Fraud
If you’ve invested in a variable annuity and suspect something went wrong, you may be dealing with fraud or misconduct. At Varnavides Law, PC, we help investors like you recover losses from bad advice or unethical practices.
Our firm focuses on securities litigation and investment fraud cases. We understand how confusing these situations can be, and we’re here to provide clear guidance. How can we help? Contact us today for a free consultation to discuss your case.
Variable annuities are popular for retirement planning, but they can lead to big problems when brokers or advisors put their own interests first. High commissions often drive unsuitable recommendations, leaving investors with unexpected fees, penalties, or losses.
Our experienced variable annuity fraud attorney fights for your rights and work to get your money back through arbitration or litigation.
What Is a Variable Annuity?
A variable annuity is a contract between you and an insurance company. You make a lump-sum payment or a series of payments, and in return, the company agrees to make periodic payments to you later, often during retirement.
What makes it “variable” is that your money is invested in options like mutual funds, stocks, or bonds. The value of your annuity changes based on how these investments perform.
Unlike fixed annuities, which guarantee a set payout, variable annuities offer the potential for higher returns but come with more risk. They also provide tax-deferred growth, meaning you don’t pay taxes on earnings until you withdraw the money.
Many include features like death benefits, where your beneficiaries get at least the amount you invested if you pass away before payouts start.
However, these products are complex. They often have high fees, including mortality and expense charges, administrative costs, and investment management fees.
Surrender charges can apply if you withdraw early, sometimes as high as 10% in the first few years. Riders for extra benefits, like guaranteed minimum income, add even more costs.
Financial advisors must explain these details fully and ensure the product fits your needs, age, risk tolerance, and financial goals. When they don’t, it can lead to fraud claims.
At Varnavides Law, we meticulously investigate your annuity contract and your advisor’s conduct to expose misconduct and pursue your rightful recovery.
Common Types of Variable Annuity Fraud
Variable annuity fraud happens in several ways, often tied to broker misconduct.
One common issue is misrepresentation.
Advisors might downplay risks or exaggerate benefits to close the sale. For example, they could claim the annuity is “guaranteed” when it’s not, or hide the impact of market downturns.
Another type is unsuitable recommendations.
Brokers have a duty to suggest investments that match your situation. Pushing a variable annuity on someone near retirement who needs stable income, or on a young investor who can’t afford the long lock-up period, can be grounds for a claim. Seniors are especially vulnerable, as these products can tie up funds for years.
Churning or twisting is also frequent.
This involves switching from one annuity to another without a good reason, just to generate new commissions. Each switch resets surrender periods and fees, eroding your investment. If your advisor encouraged a switch without clear benefits to you, it might be fraudulent.
Omission of key facts is another form of fraud.
Advisors might not disclose high commissions they earn—sometimes 7% or more—or the tax implications, like penalties for early withdrawals before age 59½. In some cases, they sell variable annuities inside IRAs, where the tax-deferral benefit is redundant, leading to unnecessary costs.
Breach of fiduciary duty occurs when advisors prioritize their profits over your best interests. Under securities laws, they must act ethically. If they didn’t, you could recover damages through FINRA arbitration or court.
Our team at Varnavides Law has handled many such cases, helping clients prove misconduct and secure compensation.
Signs You May Be a Victim of Variable Annuity Fraud
Spotting fraud early can make a big difference. Here are some red flags:
- Unexpected Fees or Penalties: If you’re hit with high surrender charges or ongoing fees that weren’t explained, your advisor may have misled you.
- Poor Performance Without Warning: Variable annuities fluctuate, but if losses are severe and your advisor downplayed risks, it could be an issue.
- Pressure to Buy or Switch: Did your broker rush you into the investment or suggest replacing an existing annuity without clear reasons? This often signals commission-driven motives.
- Mismatch with Your Goals: If you’re conservative but ended up in high-risk sub-accounts, or if the annuity locks up money you need soon, it might not suit you.
- Lack of Disclosure: Advisors must provide prospectuses and explain all terms. If key details were omitted, like rider costs or death benefit limitations, fraud may be involved.
- Targeting Vulnerable Groups: Elderly investors or those with limited experience are common targets. If you feel taken advantage of, trust your instincts.
The information contained in this article is provided for educational and informational purposes only and does not constitute legal advice or create an attorney-client relationship. Each case is unique, and the applicability of any information discussed herein depends on the specific facts and circumstances of your situation.
If any of these sound familiar, don’t wait. Statutes of limitations apply, and evidence can fade. Contact Varnavides Law for a free review. We’ll assess your situation and explain your options clearly.
How Varnavides Law Can Help with Your Variable Annuity Fraud Claim
At Varnavides Law, we provide expert guidance in investment fraud recovery, led by Gary Varnavides’ deep securities knowledge. We begin by analyzing your documents and advisor interactions.
We handle claims through FINRA arbitration, which is often faster and less costly than court. Our process includes gathering evidence, like proving unsuitability or misrepresentation, and calculating your losses—including fees, lost opportunities, and interest.
Many cases settle before a hearing, but we’re prepared to fight. We’ve represented investors in complex fraud matters, recovering substantial amounts.
Our goal is simple: get you the justice and compensation you deserve. We’ll keep you informed every step, using straightforward language so you understand what’s happening.
The Process of Recovering Your Losses
Recovering from variable annuity fraud follows a clear path. First, we evaluate your case during a free consultation. Bring any documents you have—we’ll handle the rest.
Next, we file a claim with FINRA or pursue litigation if needed. This involves a statement of claim detailing the fraud, supported by evidence like expert testimony on suitability.
Discovery follows, where we request records from the broker or firm. We may depose witnesses to build your case.
If no settlement, we go to arbitration. A panel hears both sides and decides. Awards can include rescission (undoing the sale), damages, and sometimes punitive amounts for bad faith.
Throughout, we aim for the best outcome. At Varnavides Law, we’re committed to making this process as smooth as possible.
Why Choose Varnavides Law for Your Variable Annuity Fraud Case
Choosing the right attorney matters. Varnavides Law stands out with our focus on investor rights and track record in securities fraud. Gary Varnavides brings decades of experience in litigation and arbitration, handling cases against major firms.
We’re client-centered, offering personalized attention. Unlike larger firms, we treat you as a partner, not a number. Our simple, clear communication ensures you feel confident.
We also understand the emotional toll of fraud. Losing retirement savings is stressful—we’re here to support you. Plus, our free consultations mean no risk in reaching out.
If you’re ready to fight back, call or email today. Gary will provide a clear assessment of your rights.
Frequently Asked Questions
What is variable annuity fraud?
Variable annuity fraud occurs when financial advisors misrepresent the product, recommend unsuitable options, or omit key risks to earn commissions. This can lead to significant investor losses.
How do I know if my variable annuity was unsuitable?
If it doesn’t match your age, risk tolerance, or financial needs—like tying up funds you need access to—it may be unsuitable. An attorney can review this for you.
Can I recover my losses from variable annuity fraud?
Investors may pursue recovery through FINRA arbitration or lawsuits for fees, penalties, and lost earnings, depending on evidence of misconduct. We can assess your potential options.
What does a free consultation involve?
We’ll discuss your situation, review documents, and explain options. It’s confidential and no-obligation.
Are variable annuities always bad investments?
No, they suit some people for tax benefits and growth potential. The issue arises from fraud or poor advice.
If you have more questions or suspect fraud, contact Varnavides Law today. We’re here to help you recover and move forward.
