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Securities News Releases
Wednesday, December 06, 2006
Contact: Stacie Temple, (573) 526-5076
Contact: Carrie Bebermeyer, (573) 526-0949
Carnahan Spotlights Inappropriate Sale of Variable Annuities
Victims are Senior Citizens, Again
Jefferson City, Missouri – Secretary of State Robin Carnahan's Commissioner of Securities Matt Kitzi entered into consent orders last week with Jolee Martin of St. Charles, Missouri and her employer, World Group Securities, Inc., based in Duluth, Georgia concerning $1.2 million in unsuitable investment recommendations by Martin and lack of supervision by her employer in the sale of variable annuities to Missouri investors.
According to the first order, Martin recommended that eight Missouri residents between the ages of 72 and 87 invest in variable annuities. The Missourians invested approximately $1.2 million with Martin, resulting in commissions to World Group Securities of approximately $98,000, some of which was paid to Martin. While the investments paid large commissions to Martin and her employer, they were not suitable for her clients.
Because variable annuities include long-term commitments of money that are subject to high fees, surrender penalties and frequently higher levels of risk, they are inappropriate for many investors, especially seniors.
Two of these investors were living in nursing homes at the time of the sale. One of the sales was made to an 87 year-old Missourian, despite a policy by the annuity's producers against the sale of the annuity product to individuals over the age of 75.
"Variable annuities are complex investments that are not suitable for everyone," said Carnahan. "It is important for investors, especially those over 65, to understand how long their money will be tied up, as well as the fees and commissions associated with an investment before they hand over their hard-earned money or retirement savings."
According to the consent orders, Martin's registration was suspended for four months, and she is prohibited from selling variable annuities or handling accounts for individuals over the age of 65 for five years. She was also fined $25,000.
World Group Securities agreed to redistribute the commissions it received from Martin's sales to the Missouri investors. The company will also pay $125,000 in fines and payments.
For more information regarding investments and fraud protection, or for information regarding a company or representative, call the Missouri Investor Hotline toll-free at 1-800-721-7996 or visit the Secretary of State's web site at www.sos.mo.gov/securities