FOR IMMEDIATE RELEASE
Jun 30 2005
Contact: Stacie Temple; David Cosgrove, (573) 526-5076; (573) 751-4704

Carnahan Announces $11 Million Recovery from Kansas City Brokerage Firm



More than $400,000 will be given back to Missouri investors affected by Waddell & Reed's actions. Missouri will also receive $107,000 from the settlement, which will be allocated to Missouri public schools and investor education funds.

Missouri was the first state to take action earlier this year against Waddell & Reed for recommending variable annuity exchanges to its customers without determining the suitability of the transactions. On March 25, Commissioner David B. Cosgrove summarily suspended Waddell & Reed's broker-dealer registration in the State of Missouri. Waddell & Reed settled with both the National Association of Securities Dealers (NASD) and a coalition of states shortly thereafter.

"I am pleased that Missouri investors affected by this company's actions will receive money back. Protecting investors against unsuitable investment practices is a top priority of my Securities Division and we will continue to pursue companies who do not act in the investors' best interest," said Carnahan.

According to Carnahan, the activities surrounding these investments cost Missouri investors hundreds of thousands of dollars and netted $1.6 million in commissions for Waddell & Reed. More than 250 Missouri investors were affected by the "switching" practices of Waddell & Reed.

Many investors stated that they were told by Waddell & Reed that if they did not switch their annuity to a different policy, they would no longer be able to 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.

Variable annuities are often described as mutual funds wrapped in an insurance policy and are sold through brokerage firms and insurance agencies. Carnahan advises investors to ask a lot of questions if considering variable annuities because these complex investment products often have higher commissions and fees and may not be appropriate for many investors.