Fifth Third failed to disclose that the existing VA had an accrued living benefit value, or understated the living benefit value, which the customer would forfeit upon executing the proposed exchange.
Fifth Third represented that new, proposed VAs had living benefit riders even though the proposed VA did not, in fact, include a living benefit rider.
Finra found that the firm's principals ultimately approved approximately 92 percent of VA exchange applications submitted to them, but because of the firm's supervisory deficiencies, it did not obtain a reasonable basis to recommend and approve many of these transactions, Finra said.
This is the second go-found between Finra and the firm for VA transgressions. The regulator found that Fifth Third failed to comply with a term of its 2009 settlement with Finra which found that, from 2004 to 2006, Fifth Third entered into 250 unsuitable VA exchanges and transactions with inadequate systems and procedures governing its VA exchange business.
For more than four years following the 2006 settlement, up through 2010, the firm failed to fully implement an independent consultant's recommendation that it develop certain surveillance procedures to monitor VA exchanges by individual registered representatives, Finra said.