Judge allows SEC annuity fraud allegations against advisor to proceed
December 27, 2023 by John Hilton
A federal judge refused to toss out annuity fraud charges filed by the Securities and Exchange Commission against a Massachusetts financial advisor.
U.S. District Judge Denise J. Casper denied a motion to dismiss filed by Jeffrey Cutter, who is also an insurance agent. Cutter argued that the Investment Advisers Act of 1940 did not apply to the allegations made by the SEC.
Click HERE to read the full story via IN
Wink’s Moore on the Market: Forgive me while I get caught-up on a little bit of reading.
It looks like the Cutter case is not being dismissed.
The thing that irks me is that the U.S. Securities and Exchange Commission‘s complaint says that “Cutter earned 7-8% commissions on annuity sales as an agent, compared to 1.5-2% fees while managing assets as a fiduciary advisor.”
I’m not going to down anyone who charges fees, but this is not a fair comparison.
Annuities are paid a single time. Fees are assessed every year, forever.
The insurance company pays the commission. The client pays the fees.
Over the typical annuity surrender period, the client is going to pay more in fees, than the commission paid.
Different ways of being compensated…neither is superior…they are just different.
Shout out to my buddy John Hilton for this update. -sjm