SEC Accuses Financial Advisor of Making Millions in Deceptive Annuity Sales
March 28, 2023 by Kenneth Corbin
The Securities and Exchange Commission is accusing a registered investment advisor of breaching his fiduciary duty and deceptively generating millions in commissions from annuity sales.
The SEC’s complaint alleges that for eight years advisor Jeffrey Cutter “engaged in a pattern of deception designed to steer his investment advisory clients to certain insurance products over other investment options, while concealing his financial motive to do so in breach of his fiduciary duties as an investment advisor.”
Wink’s Moore on the Market: An investment adviser was slammed. He was selling indexed annuities.
It seems that the SEC is quick to point-out that this adviser made 7% commission up-front, when he was also making as much as 2% annually in AUM. So, in four years’ time, he would have made more on AUM than on the annuities. Nevermind that the commission was paid by the insurance company, and the AUM came directly out of the client’s money. But, just read it. It seems very judgey.
On the other hand, it is alleged that this adviser did not fulfill his fiduciary duty to his clients. He apparently did not disclose his commissions adequately.
Sounds like he may have been churning too. Earning two commissions on the same money, while subjecting your clients to surrender charges? We need a lot LESS of that!
He is also accused of falsifying clients’ financial information, in order to get around suitability. Well, THAT never happened in the history of annuity sales. Sheesh. At least folks will see that you can be taken to task for this.
Apparently, this guy’s marketing organization also gave him a ton of marketing dollars, which he didn’t disclose.
Fulfilling your fiduciary obligations to annuity clients is no joke. The U.S. Securities and Exchange Commission is watching. -sjm
