Off to Jail for Selling an Annuity

According to the Wall Street Journal, Glenn Neasham, an independent insurance agent in California, was ordered to spend 90 days in jail on a felony-theft conviction for selling a complex annuity to an 83-year-old woman who prosecutors alleged had shown signs of dementia.  Neasham was convicted of felony theft in CA for selling the annuity to the elderly woman.  Mr. Neasham, 52 years old, maintains the woman appeared fine and wasn’t confused at the time of the 2008 transaction and that he acted appropriately.  The case underlines authorities’ continuing discomfort with “indexed” annuities, savings products that pay interest tied to the performance of stock- and bond-market indexes.

“The case will definitely have a chilling effect,” said Larry Rybka, chief executive of ValMark Securities Inc., which includes an insurance brokerage. Mr. Rybka fired off a memo last month on the case to his firm’s internal compliance and marketing teams, reinforcing instructions to make sure brokers warn prospective buyers of the withdrawal penalties and other features. The firm for years has discouraged agents from selling certain indexed annuities. Now Mr. Rybka wants them to sell even fewer.

 

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