HD Vest recently signed a settlement agreement with one of its regulators settling disputes about issues at HD Vest that could significantly affect whether HD Vest customers who bought annuities are regretting that decision now.
According to the Financial Industry Regulatory Authority (FINRA), HD Vest had inadequate compliance procedures in three critical areas. HD Vest failed to adequately identify liens and judgments against its own financial advisors, failed to adequately disclose complaints against its advisors, and failed to properly monitor variable annuity sales.
1) HD Vest financial advisors who sold variable annuities may have had hidden debts.
Financial advisors have to disclose liens and judgments against them, for several good reasons. First, if your financial advisor has gotten himself into big debts, he might not be a good source of advice for YOUR finances! Another big reason why financial advisors deserve to know about their advisor’s unpaid judgments and liens is that these financial obligations might put pressure on your advisor to sell you a product that pays the advisor a big commission to pay his debts, but which is unsuitable for you. Variable annuities can fit into this category. They pay big commissions—much more than stocks and most mutual funds—but often don’t achieve the returns investors have been led to expect.
2) An HD Vest financial advisor who sold you a variable annuity may have hidden complaints from other customers.
In addition to liens and judgments, financial advisors must disclose complaints brought by customers. Investors deserve to know if other customers are angry at their financial advisor, and to see if their advisor is mismanaging their account in a similar way. According to FINRA, HD Vest failed to timely disclose customer complaints. Without this information, investors may have been doing business without important information they needed to select a financial advisor.
3) HD Vest failed to adequately supervise variable annuity sales.
Variable annuities are one of the financial products we “love to hate” at Investor Defense Law. While there may be good reasons to buy a variable annuity, we believe that financial advisors sell too many of these products for one reason only—the large commissions they receive!
Consequently, proper supervision of financial advisors is especially important when they are selling variable annuities. HD Vest came up short, failing to doublecheck paperwork used to determine whether variable annuity sales were suitable, according to FINRA. FINRA also alleged that HD Vest failed to adequately confirm that its clients were not being sold new variable annuities to replace old annuities just so that advisors could receive new commissions.
It appears that HD Vest has cleaned up its act, but investors who purchased variable annuities and other products from HD Vest financial advisors while these holes in HD Vest’s compliance were unfilled may have been harmed.
If you have questions about investment losses, the securities litigation attorneys at Investor Defense Law LLP may be able to help, and offer free initial consultations.
Investor Defense Law LLP is a law firm dedicated to helping investors in California, Georgia, and Washington State recover investment losses.
We understand investment fraud and financial advisor malpractice. Our lawyers know how to sue investment advisors, brokerage firms, and financial advisors. To receive a free case evaluation, contact an investment fraud attorney at 800.487.4660.