NASD fines WMA Securities $125,000 for failure to report complaints
World Marketing Alliance (WMA) Securities Inc. has been fined $125,000 by the regulatory arm of the National Association of Securities Dealers (NASD) for failing to report nearly 900 customer complaints regarding the sale of its variable life insurance policies.
|To find out the disciplinary record of WMA or any other securities brokerage that sells life insurance, contact NASD Regulation at (800) 289-9999 or send an e-mail through the NASD Regulation Web site.|
An investigation by NASD Regulation Inc. found that WMA did not report about 75 percent of 1,200 customer complaints it received during a three-year period ending March 1999. The fine was issued to WMA at the beginning of August.
The NASD says the bulk of the complaints alleged "misrepresentations and omissions" regarding the brokerage's sale of variable life insurance.
WMA is a Duluth, Ga.-based brokerage that sells various forms of health and life insurance and investment and retirement plans through many different investment and insurance companies.
Barry Clause, president of WMA, says the fine stems from the fact that WMA did not report complaints to the NASD that originially had been received by the insurance companies that issued the policies. For example, if a customer who bought a policy through a WMA agent complained to the insurance company about the policy's sale, the insurance company was then supposed to report the complaint to WMA. In turn, WMA was supposed to notify the NASD about the complaint, a task that Clause acknowledged the company failed to do.
According to the NASD, WMA acknowledged to the NASD in September 1998 that they had been not been reporting these complaints. Clause says WMA then revised its system to reflect a better reporting system. The bulk of the 900 complaints it failed to report to the NASD were received prior to the changes, he says. Still, the NASD found the violations serious enough to the fine the brokerage.
"It's a serious matter, and we've treated it as such," Clause says. "We're confident that we're now in compliance with NASD rules."
As part of its agreement with the NASD, WMA has agreed to retain an outside consultant to perform periodic reviews of its system for reporting complaints. Clause says that KPMG will review the company's reporting procedures on a quarterly basis through August 2001.