FINRA Investigates Variable Annuities with Subaccounts in Hedge Funds

Investment News reports that FINRA is investigating half a dozen independent broker-dealers that sold variable annuities with subaccounts invested in hedge funds that resulted in $18 million in client losses during the credit crisis. The variable annuities were issued by Sun Life Financial, Inc., and sold by firms such as Geneos Wealth Management Inc., Lincoln Financial Network, National Planning Corp., SagePoint Financial Inc., FSC Securities Corp., and other independent broker dealers.

The two hedge funds were the Foresee Strategies Insurance Fund and the Foresee Strategies 3(c)(1) Insurance Fund LP, which were related to a group called the SALI Multi-Series Fund LP. The alleged strategy of the funds included investing in options to bet against market volatility. The strategy, developed during a period of low volatility between 2004-2007, collapsed disastrously during 2008, and resulted in large losses for numerous investors. FINRA arbitration claims have already been filed and settled against some of the firms who sold these variable annuities. Investors also are suing Sun Life Financial in state court in Tennessee.

Sonn Law Group specializes in representing investors (not brokerage firms) in securities arbitration and investor fraud cases throughout the country. To learn more, including whether you may have a claim for your variable annuity investment or other investment losses, please call us at 844-689-5754 or complete our “contact form.”