If a stockbroker, financial advisor, or insurance agent sold you a variable annuity that lost value, charged unexpected surrender fees, or never matched what they told you it would do, you may have a claim against the broker and the brokerage firm that supervised them.

Furgison Law Group represents investors nationwide in claims involving unsuitable variable annuity recommendations, undisclosed fees and surrender charges, broker churning, and failures of supervision by the firms that put these products in front of you. Many of these matters also involve fixed annuities, whole life policies, and other insurance products that the same advisor sold alongside the variable annuity — and that combination can change where and how the case gets litigated. We work on a 100% contingency basis: no fees unless we recover for you.

What Are Variable Annuities — and Why Are They So Often Misused?

A variable annuity is a hybrid investment-and-insurance product. You give the insurance company a lump sum or stream of payments, that money is invested in subaccounts that look a lot like mutual funds, and the insurance company promises some combination of future income, death benefit, or living benefit guarantees in exchange for fees that come out of your account every year.

In the right hands, for the right investor, that structure can serve a purpose. The problem is how often variable annuities end up in the wrong hands for the wrong reasons.

Variable annuities pay brokers and agents some of the highest commissions in the financial services industry — frequently 5% to 7% of the amount invested, paid by the insurance company up front. That commission is funded by the long surrender-charge schedules built into these products: schedules that can lock investors in for seven, eight, even ten years, with penalties of 7% or more for taking your own money out early.

The combination of high commissions to the seller and steep exit penalties for the buyer creates a built-in incentive for misconduct.

Common Misconduct Patterns

Unsuitable recommendations. Variable annuities are generally inappropriate for investors who need access to their money in the near term, who already hold their assets in tax-deferred accounts (where the annuity's tax deferral adds nothing), or whose risk tolerance and time horizon don't match the product. FINRA Rule 2330 imposes specific suitability requirements on variable annuity sales, and brokers and firms regularly fail to meet them.

Surrender charges and fees never explained. Investors are often told their money is "available" or "liquid" without any clear explanation that pulling it out before the surrender period ends will trigger a substantial penalty. Internal account fees — mortality and expense charges, administrative fees, rider fees, subaccount fees — routinely run 2% to 4% per year and are buried in prospectuses that run more than a hundred pages. The agent knows the client won't read them. The agent doesn't walk through them either. The disclosure exists on paper and nowhere else."

Switching and replacement fraud. A broker recommends surrendering an existing annuity (often paying a surrender charge in the process) and putting the proceeds into a new annuity that pays the broker a fresh commission. Unless there is a clear, demonstrable benefit to the customer, this kind of "1035 exchange" or "switch" is presumptively unsuitable and a longstanding focus of FINRA enforcement.

Concentration and portfolio stacking. Putting a disproportionate share of an investor's net worth into one or several annuities and insurance products — particularly with overlapping subaccount holdings or stacked permanent life policies — exposes the investor to risk well out of line with what a properly diversified portfolio would carry.

Failure to supervise. Under FINRA rules, brokerage firms have an independent duty to supervise their representatives' variable annuity sales, including specific principal-review requirements before any annuity sale closes. When firms fail at that duty, the firm itself is liable, regardless of whether the rep is still around.

New York Life and NYLIFE Securities

New York Life Insurance Company is one of the largest issuers of variable annuities in the United States, and its broker-dealer affiliate NYLIFE Securities LLC has been the subject of multiple FINRA regulatory actions involving exactly the kind of supervisory failures that create variable-annuity claims.

October 25, 2021 FINRA action. NYLIFE Securities consented to FINRA findings that the firm failed to establish, maintain, and enforce a supervisory system reasonably designed to achieve compliance with FINRA's suitability requirements as they pertained to mutual fund and cross-product switches — including fixed and variable annuities. NYLIFE was censured, fined $200,000, and ordered to pay $63,347 in restitution to customers. (FINRA Letter of Acceptance, Waiver and Consent No. 2017056197102.)

November 20, 2019 FINRA action. NYLIFE Securities consented to findings that it had unilaterally adjusted customers' risk tolerances and investment objectives to accommodate sales of higher-risk products, leading to customer losses totaling $1.4 million. NYLIFE was censured, fined $250,000, and ordered to pay full restitution. (FINRA AWC No. 2016050685102.)

These regulatory findings — public, formal, and not contested by NYLIFE — are part of why claims against the firm and its representatives continue to move forward.

NYL agents typically sell across the entire NYL product shelf: variable annuities issued by New York Life Insurance and Annuity Corporation, fixed annuities, whole life policies, term life, and other permanent life insurance products. When an investor's losses come from that combination of products, the case is rarely just a "variable annuity case." It is usually a broader course-of-conduct claim that reaches across both the securities and the insurance side of the business.

Where These Cases Are Litigated: Court vs. FINRA Arbitration

Most disputes between investors and broker-dealers are subject to mandatory arbitration before FINRA. The FINRA arbitration agreement an investor signs at account opening, together with FINRA Rule 12200, generally requires securities-related claims against a member firm to be heard in a FINRA arbitration forum rather than in state or federal court.

That arbitration regime applies to securities claims. Many investors who lost money to broker misconduct were sold a mix of products — variable annuities (securities), alongside whole life policies, term life, and fixed annuities (not securities). When the conduct involves both kinds of products and the claims are intertwined, it is often possible to litigate the matter in state court rather than in FINRA arbitration — and to keep the related claims together.

That distinction matters. State court means access to a jury, broader discovery, and a substantively different damages environment than FINRA arbitration. The prospect of a jury sitting in judgment of how a major insurance company sold complex products to a retiree or a busy professional is meaningful leverage that simply does not exist in arbitration. Defendants, for the same reason, prefer arbitration. The forum question — whether a case proceeds in arbitration or in court — is one of the most important early decisions in any matter that involves a mix of products. We evaluate it carefully before any complaint is filed.

What If the Sale Happened Years Ago?

Many investors who were sold unsuitable annuities or insurance products by a fiduciary advisor wait years before connecting their losses to the original misconduct. That isn't a personal failing — it is exactly how this kind of misconduct works. The advisor was supposed to be acting in your best interest. You were never supposed to be auditing the relationship for fraud.

California recognizes this through the delayed discovery doctrine: the statute of limitations on these claims generally does not begin to run until you discovered, or through reasonable diligence should have discovered, the facts giving rise to the claim. Where the relationship was a fiduciary one — as it is in the relationship between an investment advisor and a client — the doctrine has particular force, because the fiduciary had an affirmative duty to disclose the very facts you might otherwise have had a duty to investigate. You were entitled to trust the advisor. The clock generally does not start running until that trust is broken.

This matters in two practical ways. First, the misconduct in these cases often continued through multiple subsequent recommendations — each one a fresh transaction that, under California's continuing violation and continuous accrual rules, may carry its own limitations clock. Second, when a case can be brought in California state court rather than FINRA arbitration — which is often the result when fixed insurance products are part of the conduct — the FINRA Rule 12206 six-year eligibility window does not apply. The governing rule becomes the underlying state-law statute of limitations, subject to the delayed discovery doctrine just described.

If a product was sold to you eight, ten, or fifteen years ago and you only recently realized what happened, the case is not necessarily over. Every claim is fact-specific. We will tell you for free.

Who's Most at Risk?

Variable annuities and permanent life insurance products are disproportionately sold to retirees and pre-retirees who are looking for "guaranteed" income and don't understand that the guarantees come at a substantial annual cost. They are also disproportionately sold to professionals — including physicians, dentists, and engineers — who are time-poor, trust-prone, and presumed by sales agents to be sophisticated about money even when their training was in something entirely different. High-net-worth individuals are routinely sold complex tax-deferral or estate-planning narratives around these products that don't survive scrutiny.

Elderly and disabled investors warrant particular attention. California's Financial Elder Abuse statute (Welfare and Institutions Code § 15600 et seq.) provides additional protections — including the availability of attorneys' fees and enhanced damages — for investors aged 65 or older and for dependent adults, when the conduct meets the statutory standard.

If you fit one of these profiles and you have a variable annuity or insurance product you didn't fully understand at the time of purchase, your situation is worth a closer look.

What You Can Recover

Damages available in a successful claim typically include compensatory damages — the difference between what you actually have and what a suitable, properly recommended portfolio would have produced — together with reimbursement of surrender charges incurred or to be incurred to exit the position. In appropriate cases, emotional distress damages may be recoverable, particularly where the misconduct caused significant financial disruption to a retired investor. Punitive damages are available where the conduct rises above ordinary negligence. Where the California Financial Elder Abuse statute applies, attorneys' fees and enhanced damages are also available.

Why Furgison Law Group

We have been on both sides of these claims. Jon Furgison spent the first six years of his career representing brokerage firms, financial advisors, and insurance agents — defending the very kinds of cases the firm now brings against them. He left that defense practice in 2005 to open Furgison Law Group on the plaintiff side, and he has been representing investors in securities and insurance disputes ever since.

That earlier defense-side experience is built into how the firm prepares cases today. We know how supervisory files read, how compliance reviews are run (and where they fall short), how OSJ principals approve annuity sales they should have flagged, how brokerage firms position themselves when a claim arrives, and where the inconsistencies between what was sold and what was supervised tend to surface. We are intimately familiar with how these matters work from the inside, and that knowledge is in every claim we file.

Jon Furgison has been admitted to the California Bar since 1999. He is rated AV Preeminent by Martindale-Hubbell and has been selected to Super Lawyers each year since 2017. The firm is based in Southern California, with offices in Beverly Hills and Agoura Hills, and represents investors nationwide.

The firm represents clients on a 100% contingency basis: no upfront fees, no costs unless and until we recover. The initial case evaluation is free.

Talk to a Variable Annuity Fraud Lawyer

If you bought a variable annuity, fixed annuity, or insurance product from a broker or financial advisor and you're not sure whether it was right for you, we will tell you for free. The conversation is confidential and no-obligation.

Call (310) 356-6890 or contact us through our secure form for a Free, Confidential Case Evaluation.

Past results do not guarantee similar outcomes. Each case is evaluated on its specific facts and circumstances. Submission of an inquiry does not create an attorney-client relationship and information submitted is not guaranteed to be confidential until an engagement is established. Attorney advertisement.

Last updated: May 2026.