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Fifth Third Securities Sanctioned by FINRA This Month

Fifth Third Securities

Public records provided by the Financial Industry Regulatory Authority (FINRA) and accessed on May 10, 2018 indicate that Ohio-based brokerage and advisory firm Fifth Third Securities was recently sanctioned by FINRA in connection to alleged rule violations. Fitapelli Kurta is interested in hearing from investors who have complaints regarding Fifth Third Securities (CRD# 628).

Founded in Ohio in 1925, Fifth Third Securities is headquartered in Cincinnati, Ohio and registered wth 52 US states and territories. According to the firm’s BrokerCheck report, it has received 36 regulatory sanctions and 19 customer complaints that evolved into arbitration.

In May 2018 FINRA sanctioned Fifth Third Securities in connection to allegations it failed to “appropriately consider and accurately describe the costs and benefits of variable annuity (VA) exchanges,” as well as for recommending variable annuity exchanges in the absence of a reasonable basis to believe such transactions were suitable for the customers in question. Fifth Third Securities failed to ensure that its representatives obtained and evaluated “accurate information” regarding the exchanges that it recommended to its customers, according to FINRA. The firm also allegedly did not adequately train its representatives and principals in proper methods for conducting a “comparative analysis of the material features” of variable annuity products. As a result, according to FINRA, Fifth Third Securities ultimately made inaccurate statements regarding the transactions’ costs and benefits, presenting them as better for the customer than they actually were.

In a review of sample exchanges which the firm approved between 2013 and 2015, FINRA determined that it “misstated or omitted at least one material fact” regarding the exchange in roughly 77% of the sample. According to FINRA, the firm overstated the total fees of the existing product; it misstated fees associated with riders; it failed to disclose that the existing product had “an accrued living benefit value, or understated living benefit value,” and that the customer would lose this if they went forward with the exchange; and the firm represented that the proposed variable annuity had a living benefit rider, though it did not. FINRA also determined that the firm’s principals approved 92% of the exchange applications that fell under their review, though Fifth Third lacked a reasonable basis to recommend and approve many of them. FINRA additionally found that the firm failed to comply with one term of a settlement made with FINRA in 2009, after FINRA found that the firm made 250 unsuitable variable annuity exchanges and had an inadequate supervisory system regarding such. Though the firm was required in that settlement to “implement an independent consultant’s recommendation that it develop certain surveillance procedures to monitor VA exchanges by individual representatives,” FINRA found that it failed to fully do so. In connection to the above findings, Fifth Third Securities was issued a fine of $4 million and ordered to pay roughly $2 million in restitution to affected customers.

FINRA’s Executive Vice President and Head of Enforcement, Susan Schroeder, made the following statement about the action: “FINRA remains vigilant in examining how member firms market variable annuities, which are complex products pitched to retirees and people saving for retirement. Returning $2 million in restitution to harmed investors is a key part of FINRA’s investor protection mission.”

If you or someone you know has lost money investing with Fifth Third Securities, call the experienced attorneys at Fitapelli Kurta at 877-238-4175 for a free consultation. You may be eligible to recoup your losses. Fitapelli Kurta accepts all cases on a contingency basis: we only get paid if and when you collect money. Time to file your claim may be limited, so we encourage you to avoid delay. Call 877-238-4175 now to speak to an attorney for free.