Financial Industry Regulatory Authority arbitrators have ruled in favor of a Florida couple who claimed a firm misrepresented the benefits of their insurance and annuity products, reports Financial Advisor.
A FINRA arbitration panel ordered Minnesota-based Woodbury Financial Services Inc. to pay $850,000 in compensatory damages to Robert and Elizabeth Catana of Key West. The couple said that one of Woodbury’s advisors sold them the insurance and annuity policies under false pretenses, and the products did not produce the income stream they were promised as they were approaching retirement.
The Catanas’ complaint pertained to three products they were sold: a variable universal life insurance policy issued by Allianz; a variable annuity issued by Pacific Life; and a variable annuity issued by Lincoln Financial.
The attorney for the couple, Matt Wolper, was quoted as saying they were not adequately advised of the risks and costs of the two variable annuities and were misled about the insurance policy. The Catanas were told the cash on the insurance policy was income when it was actually a loan against the policy, causing the death benefits and cash value to diminish over time. They came to realize that the products would not give them the income they were promised by Woodbury after they had terminated the life insurance and annuity products they had owned at a different firm, according to the attorney.
The advisor who sold the products, Raymond Anthony Ferro Jr., was terminated by Woodbury, Wolper said. Ferro died in April 2020.
In announcing the action against Woodbury, FINRA said the firm’s system for supervising additions of existing variable annuities was not reasonably designed to achieve compliance with securities laws and FINRA rules. The authority said this deficiency affected over 3,800 transactions from June 2013 to June 2015.
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