Disclaimer

The information on this website is presented as a service for our clients and Internet users and is not intended to be legal advice, nor should you consider it as such. Although we welcome your inquiries, please keep in mind that merely contacting us will not establish an attorney-client relationship between us. Consequently, you should not convey any confidential information to us until a formal attorney-client relationship has been established. Please remember that electronic correspondence on the internet is not secure and that you should not include sensitive or confidential information in messages. With that in mind, we look forward to hearing from you.

 Skip to Content

State Regulators Eye Complex Products Marketing
September 16, 2014

Joseph P. Borg, Director of the Alabama Securities Commission, and James R. Mumford, First Deputy Insurance Commissioner in Iowa, raised state securities and insurance regulatory concerns at this summer’s Insured Retirement Institute Government, Legal and Regulatory conference in Washington, D.C.

According to Mr. Borg, structured products, non-traded REITs, and private placements can be problematic without adequate disclosures regarding how the investments work, a problem that may worsen as the number of insurance agents, particularly independent ones, selling unregistered securities products increases. He attributed the problem partly to agents’ inadequate training and lack of experience with these products, but noted that, in some cases, agents are engaging in fraudulent activity and mentioned that promissory notes and self-directed IRAs may raise similar concerns due to the lack of reliable valuations.

Mr. Borg commented that a 2014 change to Alabama’s statute of limitations will facilitate prosecution of securities fraud cases, particularly those involving long-term investments, because the limitations period for securities fraud and other thefts involving deception is now five years after discovery of the deception, not three years from the transaction date.

Mr. Mumford reiterated the importance of training to ensure that insurance agents can competently explain the complex products they sell. He stated that, if the Iowa Insurance Division does not understand how a proposed new insurance product is intended to function, it will require the insurer to explain how agents will be trained to sell the product. He noted that sales activity without proper license(s) remains a concern, and stressed that Iowa Bulletins 11-4 and 11-S-1 provide guidance to those licensed to sell only insurance, or only securities, regarding the limits on their consumer interactions related to products they are not licensed to sell.
Related Practices
Securities Litigation and Enforcement
©2024 Carlton Fields, P.A. Carlton Fields practices law in California through Carlton Fields, LLP. Carlton Fields publications should not be construed as legal advice on any specific facts or circumstances. The contents are intended for general information and educational purposes only, and should not be relied on as if it were advice about a particular fact situation. The distribution of this publication is not intended to create, and receipt of it does not constitute, an attorney-client relationship with Carlton Fields. This publication may not be quoted or referred to in any other publication or proceeding without the prior written consent of the firm, to be given or withheld at our discretion. To request reprint permission for any of our publications, please use our Contact Us form via the link below. The views set forth herein are the personal views of the author and do not necessarily reflect those of the firm. This site may contain hypertext links to information created and maintained by other entities. Carlton Fields does not control or guarantee the accuracy or completeness of this outside information, nor is the inclusion of a link to be intended as an endorsement of those outside sites.