Fifth Third to Pay $6M for Cost Disclosure Failures: FINRA

Stay up-to-date with the latest developments in securities law through access to both news and all statutes and regulations. Find relevant corporate filings through a searchable EDGAR database. And...

By Jennifer Bennett

Fifth Third Securities Inc. will pay a $4 million FINRA fine and about $2 million in customer restitution to settle allegations of cost and fee disclosure failures related to variable annuity exchanges.

Cincinnati-based Fifth Third will pay close to $6 million to resolve allegations it didn’t properly describe variable annuity exchange costs, according to a Financial Industry Regulatory Authority settlement. The settlement also covers allegations Fifth Third recommended exchanges without having a reasonable basis to think they’d be appropriate.

Fifth Third didn’t ensure its representatives had accurate information about variable annuity exchanges and didn’t properly train representatives on analyzing their features, FINRA said. This caused the firm to misstate exchanges’ costs and benefits, making them seem more favorable to customers, according to FINRA. In settling, Fifth Third neither admitted nor denied wrongdoing.

“The variable annuity business is not a large one” for the firm, Larry S. Magnesen, senior vice president and chief reputation officer at Fifth Third, told Bloomberg Law. The settlement is the second major enforcement action over Fifth Third’s variable annuity sales, according to a FINRA press release. The firm received a $1.75 million FINRA fine for “unsuitable” variable annuity exchanges in 2009.

The firm “misstated or omitted at least one material fact relating to the costs or benefits” in 77 percent of a sample drawn from exchanges approved between 2013 and 2015, FINRA said.

“Our customers should have access to variable annuities when they are appropriate and suitable investments for them,” Magnesen said. “We are committed to ensuring that we operate in full compliance with all applicable regulations.”

To contact the reporter on this story: Jennifer Bennett in Washington at

To contact the editor responsible for this story: Seth Stern at

Copyright © 2018 The Bureau of National Affairs, Inc. All Rights Reserved.

Request Securities & Capital Markets on Bloomberg Law