A Houston-based insurance company specializing in tax-deferred retirement plans will pay $1.75 million in fines for failing to disclose conflicts of interest when making in-house referrals.
The Financial Insurance Regulatory Authority said on Monday that Valic Financial Advisors, a hybrid firm with more than $21.7 billion in advisory assets under management, settled charges that it gave financial incentives to representatives who encouraged clients to use the company’s advisory business.
Finra claims that when clients were interested in moving fund out of Valic variable annuities, representatives would recommend that those clients use the firm’s fee-based advisors or a fixed index annuity.
In 2012-2013, Finra was alerted to the issue as a large number of assets moved from the firm’s variable annuities to its advisory platform.
Valic representatives were prevented from recommending other products, such as non-Valic annuities or mutual funds, according to Finra.
In addition, Finra alleges that Valic failed to establish adequate supervisory and review processes surrounding the sale of variable annuities
In agreeing to the fine, Valic neither admitted nor denied Finra’s charges.
Valic is owned by a subsidiary of AIG.