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New Transamerica Acquisition Found Liable

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Transamerica Financial Advisors acquired Intersecurities which was found liable in an arbitration for more than $2,200,000 for unsuitable recommendations into subaccounts in a Western Reserve Life Insurance Company variable annuity. The claimants asserted the following causes of action: breach of NASD Conduct Rules 2110 (members shall observe high standards of commercial honor and just and equitable principles of trade); 2120 (prohibition of the use of manipulative, deceptive or other fraudulent device or contrivance); 2310 (suitability); and 3010 (duty to supervise); breach of fiduciary duty; negligence; breach of contract; common law fraud and misrepresentation; violation of Missouri Securities Law; and the failure of Intersecurities to supervise. The causes of action related Claimants’ allegations that they retired and opened IRA rollover accounts with Respondents. Claimants asserted that Respondents placed excessive
percentages of the Claimants’ retirement assets into high-cost, high-fee variable annuities from Intersecurities sister company, Western Reserve Life Insurance Company.
Respondents allegedly assured Claimants that they would receive certain monthly income from these investments. Claimants alleged that the life policies sold to Claimants are in danger of lapsing worthless despite the Respondents’ guarantees that the premiums were good to keep the policies intact for the lifetimes of the Claimants. Claimants alleged that Respondents did not advise them that the variable annuity sub-accounts were approximately 90% invested in equities, which were unsuitable to their investment objectives, and that the accounts produced virtually zero investment income. (04-06860.)


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