SagePoint Financial Inc. Censured and Fined as Part of AWC Issued by FINRA

“FSC Securities Corporation (CRD #7461, Atlanta, Georgia), Royal Alliance Associates, Inc.

(CRD #23131, Jersey City, New Jersey), SagePoint Financial, Inc. (CRD #133763, Phoenix, Arizona) and Woodbury Financial Services, Inc. (CRD #421, Oakdale, Minnesota) July 24, 2018 – An AWC was issued in which FSC Securities Corporations (FSC) was censured and fined $200,000. Royal Alliance Associates, Inc. (Royal Alliance) was censured and fined $350,000. SagePoint Financial, Inc. (SagePoint) was censured and fined $200,000. Woodbury Financial Services, Inc. (Woodbury) was censured and fined $250,000. The firms are also required to review and revise, as necessary, their systems, policies and procedures (written and otherwise) and trainings with respect to the areas described within the AWC. Without admitting or denying the findings, the firms consented to the sanctions and to the entry of findings that they each failed to establish, maintain and enforce a supervisory system and written procedures reasonably designed to supervise representatives’ sale of multi-share class variable annuities. The findings stated that the firms’ procedures did not specifically address the suitability issues related to the different surrender periods, fees and costs of the different variable annuity share classes. Similarly, the firms’ procedures did not specifically address the suitability concerns raised by the sale of an L-share contract when combined with a long-term income rider or to a customer with a long-term investment time horizon. The firms’ WSPs also failed to address when additional scrutiny may have been warranted during the required principal review and approval process because of suitability concerns about the variable annuity share class that was selected for the transaction. FSC, SagePoint and Royal Alliance’s procedures for principals only explained basic differences in the surrender period for variable annuity share classes and noted that reviewing principals should attempt to get a rationale addressing the customer’s decision to pay the increased annual fee for an L-share contract. Woodbury’s WSPs failed to address variable annuity share classes at all. In addition, the firms failed to provide sufficient training to their representatives and reviewing principals to ensure that they understood the material features of variable annuities. The findings also stated that Royal Alliance failed to establish and maintain a supervisory system and procedures reasonably designed to supervise variable annuity exchanges. Royal Alliance selected for review only a limited number of representatives based on ad hoc criteria unrelated to their volume of variable annuity recommendations, and its WSPs did not include any surveillance procedures designed to determine if representatives had problematic rates of variable annuity exchanges, as required. (FINRA Case #2016047636601)”


Financial Industry Regulatory Authority, Inc. (FINRA) is an independent, non-governmental regulator who oversees the people and firms that sell stocks, bonds, mutual funds and other securities to the public in the United States. They are authorized by Congress to protect investors. They do this by making sure the securities industry operates fairly and honestly with the public.