Business / Commercial Litigation

Variable Annuities Fraud Lawyers

A variable annuity is a combination of an insurance policy and mutual funds, or mutual funds with an insurance wrapper. When an investor purchases a variable annuity, they allocate their purchase price between sub-accounts within the variable annuity. These sub-accounts are essentially mutual funds, and are often identical to other mutual funds an investor could purchase outside of a variable annuity.

The insurance component usually provides a guaranteed death benefit. The guaranteed death benefit usually provides that at the purchaser’s death, the purchaser’s beneficiaries will receive the greater of the initial investment less any withdrawals, or the value of the mutual funds making up the variable annuity. While this may sound initially like a no lose situation, there are several drawbacks to purchasing a variable annuity. Drawbacks may include adverse tax consequences, a loss of liquidity, and substantial fees.

Although a variable annuity is a tax deferred investment-meaning gains or income made within a variable annuity are not taxed till withdrawn-there are substantial fees associated with a variable annuity. It has been argued that these fees offset the tax deferral feature of variable annuities.

When sold a variable annuity, investors have several possible claims.

First, the variable annuity may have been unsuitable for the investor given their financial situation and needs.

Second, the allocation of funds into the sub-accounts may not have been made in a suitable fashion given the specific investment objectives and risk tolerance of the investor.

Third, the broker may have misrepresented or omitted material facts about the operation and risks of a variable annuity.

Variable annuities have been much criticized by the financial press. Below are some articles highlighting the problems with variable annuities and explaining why they are generally considered to be unsuitable investments for most investors:

  • Forbes — “The Great Annuity Rip-Off”
  • CBS MarketWatch — Commentary: Annuities are a suckers bet: “Treat ’em like blind 12-year olds”
  • Wall Street Journal — “At Annuity University, Agents Learn How to Pitch to Seniors”
  • The New York Times — “Variable Annuity Guide: A Simple, Complex Idea”

The NASD has created a special Issue Center-Variable Annuity webpage to provide information for investors and brokers about the problems involved in the sale of variable annuities:

Likewise, because many variable annuities are unsuitable for investors, the NASD, predecessor to FINRA, has found it necessary to repeatedly remind its members to make sure a variable annuity is suitable for an investor before selling a variable annuity:

  • NASD NTM 96-86
  • NASD NTM 99-35
  • NASD NTM 00-44
  • Advertising of Bonus Credit Variable Annuities

The NASD even proposed a new rule to specifically govern the sale of variable annuities:

  • NASD NTM 04-45

The NASD published several “Investor Alerts” warning investors about investing in variable annuities:

  • NASD: Variable Annuities: Beyond the Hard Sell
  • NASD: Should You Exchange Your Variable Annuity

The SEC has also warned consumers about the purchase of variable annuities:

  • SEC Variable Annuities: What You Should Know

The SEC and the NASD jointly published a report on the sale of variable annuities.

  • Examination findings regarding broker-dealer sales of variable insurance products

If you believe that you may have been a victim of securities fraud involving variable annuities, you have certain rights, which you should be aware of, rights which may provide you an opportunity to recover your losses from your stockbroker or brokerage firm.

At Burg Simpson Eldredge Hersh & Jardine, P.C., our securities fraud attorneys represent victims involving variable annuities. We’ll evaluate your securities theft claim for free and won’t charge you any attorney fees unless and until we win or settle your claim. Please contact us today.

 September 16, 2020

Four Teen Victims Seek $16 Million in Arizona Child Abuse Case

A team of Burg Simpson attorneys including Scott Eldredge, Seth Katz, Ty Taber, Paul Friedman, and Christopher Post along with Tucson-based victims’ rights attorney, Lynne Cadigan, is representing four adoptive children who are named as victims in $16 million child abuse cases filed in Arizona. The children allege they were subjected to aggravated assault and… Read more »

 September 8, 2020

Former Burg Simpson Scholarship Winner is Using Her Funds Wisely!

Ms. McKenna Gilbreth is one of the previous winners of Burg Simpson’s annual scholarship. McKenna recently wrote to Mr. Michael S. Burg, Burg Simpson’s founder, to thank him and to share how she is using her scholarship funds. Now attending Southern Methodist University in Dallas, TX, McKenna wrote from her dorm room that despite the… Read more »

 September 3, 2020

September 2020 E-News

Congratulations to Our Best Lawyers in America® Forty-seven Burg Simpson attorneys have been recognized in the 2021 edition of Best Lawyers in America ®. (33 “Best Lawyers” and 14 “Ones to Watch.”) See the list of Burg Simpson attorneys selected to the 2021 Best Lawyers in America ® here. Three Burg Simpson Lawyers Also Named Best… Read more »

 August 27, 2020

Burg Simpson’s Colorado Scholarship Competition 2020-2021

Burg Simpson has always recognized the importance of access to a strong education. Starting in 2012, we launched the Burg Simpson Scholarship Competition. Each year, Colorado high school seniors are encouraged to write and submit a 1,500 word essay on the importance of the civil jury system as the guardian of American rights and liberties… Read more »

Greeley, CO – Two Workers Killed in Work Accident on 1st Ave

 June 19, 2020

David Hersh: COVID-19 and Loss of Business Income

Shareholder David Hersh Discusses COVID-19 and Loss of Business Income  David P. Hersh is a shareholder and co-practice group leader with  Burg Simpson’s business and commercial litigation department.  “I am David Hersh, Co-leader of the Commercial Litigation Department at Burg Simpson. Business owners across the country have suffered from the loss of business income as… Read more »

David TeSelle Discusses Qui Tam Lawsuits

 June 18, 2020

David TeSelle Discusses Qui Tam Lawsuits

David K. TeSelle is a trial lawyer and co-practice group leader with  Burg Simpson’s business and commercial litigation department.  “Do you have confidential information about a company who is cheating the state or federal government out of money, leaving the American taxpayer holding the bag? If so, there is something you can do about it,… Read more »

 June 16, 2020

Shareholder Jacob Burg Discusses Burg Simpson’s Commitment to Pro Bono Work

Jake Burg is a shareholder and a trial lawyer with  Burg Simpson’s personal injury department. “Since the firm’s inception in 1976, Burg Simpson has been committed to providing pro bono legal services to heroes who have dedicated themselves to serving others in times of great need. As an attorney with Burg Simpson, I was proud to… Read more »

Denver, CO – Two Injured in Motorcycle Accident on I-25 (CanAm Highway)

 June 15, 2020

Injured in a Motorcycle Crash? Call Burg Simpson Now

Injured in a Motorcycle Crash? Call Burg Simpson Now Shareholder Stephen J. Burg is a trial lawyer and the practice group leader of the firm’s personal injury department. If you, or someone you know, has been injured in a motorcycle crash, you need someone to be on your side. Insurance companies make huge profits by… Read more »

Top 100 National Trial Lawyers Legal 500 Best Lawyers in America Super Lawyers US News 2020 Top 25 Most Influential Lawyers