Securities News Releases
Monday, June 19, 2006
Contact: Stacie Temple, (573) 526-5076
Contact: Mike Seitz, (573) 526-0949
Carnahan Cracks Down on Agent in Variable Annuity Case
Jefferson city, Missouri -- Secretary of State Robin Carnahan's Commissioner of Securities, Matt Kitzi, recently issued a consent order involving a former supervising agent at Thrivent Investment Management, Inc.
The order involves Edward Matthes, a registered broker-dealer agent in Missouri who worked for Thrivent from 2002 until February of this year. In 2004, Matthes, then a Regional Management Associate with Thrivent, and Mark Johnson, an agent who Matthes supervised, sold a variable annuity contract worth approximately $200,000 to a St. Louis-area resident who was widowed less than one month before the date of the contract.
According to the order, the widow's husband had purchased a business the day before his death, liquidating all of the couple's assets and leaving the unemployed widow with little more than the $200,000 in proceeds from his life insurance policy. The order states that Johnson, who Matthes supervised at the time, advised her to use her insurance proceeds to buy a variable annuity. The investment concentrated approximately 85-90% of her liquid net worth into an investment that carried with it taxes, IRS penalties, and surrender fees upon early withdrawal. Some of those penalties were triggered six months after the purchase when the widow had to withdraw money from the annuity to pay her property taxes.
Neither Thrivent nor Johnson was named as a Respondent in this matter, though the Securities Division has ongoing investigations into the conduct of both parties.
In the order, Matthes agreed to a 60-day prohibition against the sale of variable annuities, and to pay restitution and money to the Investor Education and Protection Fund. The Securities Division is continuing to work to get additional money back for the victim.
"This case is another example of how variable annuities can be unsuitable for many investors," Carnahan said. "My office will continue to crack down on agents and companies who misuse variable annuities to prey upon unfortunate victims."
Carnahan cautions investors that the high commissions on variable annuity sales often entice agents to recommend these products, even when that recommendation is clearly unsuitable or at least questionable.
For more information regarding investments and fraud protection, visit the Secretary of State's web site at www.sos.mo.gov/securities or call the toll free investor hotline at 1-800-721-7996.