FOR IMMEDIATE RELEASE
Mar 25 2005
Contact: David Cosgrove, (573) 751-4136
Carnahan Takes Action Against Kansas Broker-Dealer Firm
Missouri investors lost hundreds of thousands of dollars
Carnahan and other agencies around the country have been investigating Waddell & Reed's campaign to switch variable annuity contracts they sold to consumers from United Investors Life Insurance Company ("UILIC") to Nationwide Insurance Company ("Nationwide") between January 2001 and August 2002.
Waddell & Reed convinced more than 250 Missouri consumers to switch the variable annuities they purchased through Waddell & Reed. According to Carnahan, the activities surrounding these investments netted over $1,000,000 in commissions for Waddell & Reed, but cost Missouri investors hundreds of thousands of dollars and related benefits.
Many investors stated they were told by Waddell & Reed that if they did not switch their annuity to a Nationwide policy they could no longer have Waddell & Reed or its agents as their advisor. Additionally, the high-pressure pitch did not include pertinent information regarding the repercussions of the switch. The National Association of Security Dealers (NASD) also alleges that several of these exchanges did not meet the NASD standards for suitability.
Commissioner Cosgrove's order summarily suspends Waddell & Reed's broker-dealer registration in the State of Missouri for 14 days pending a hearing to show cause before the Commissioner why they should not be barred or censured.
Carnahan stated the order is needed to "protect Missouri investors against investments that do not suit their needs or are not in their best interest." She added, "We will pursue all actions within our office's authority to prevent this company from causing additional harm to Missouri investors."
Variable annuities are contracts between the investor and an insurance company, under which the insurer agrees to make periodic payments to the investor. They offer investment options in mutual funds and a range of benefits.
Carnahan recently announced a list of the "top ten threats to investors," which included variable annuities as the third most common ploy being used to cheat Missouri investors out of hundreds of millions of dollars.
For more information regarding investments and fraud protection, visit the Secretary of State's web site at www.sos.mo.gov.