Advisor: SEC trying to ambush my defense on bad annuity sales charges
February 25, 2025 by John Hilton
A Massachusetts financial advisor claims the Securities and Exchange Commission is trying to ambush his defense in an annuity sales complaint by adding five surprise witnesses and “entirely new theories of liability” two months before trial.
Jeffrey Cutter is asking a federal judge to deny the five witnesses the SEC added for the April 14 trial start.
“This is not a harmless technicality,” reads a memorandum Cutter’s attorneys filed Tuesday.
Wink’s Moore on the Market: I haven’t seen much about the Cutter case in a long while.
So, thank you John Hilton at InsuranceNewsNet.
This is a case where a hybrid RIA is being prosecuted by the U.S. Securities and Exchange Commission, for not properly disclosing conflicts of interest.
Some thoughts:
– “Cutter earned 7-8% commissions on annuity sales as an agent, compared to 1.5-2% fees while managing assets as a fiduciary advisor.”
***Before the annuities are out of surrender charges, the annual fees owed to a financial advisor would be more than the commission was.***
– “By misrepresenting to Webber that the surrender charge on the annuity Defendant advised her to surrender to purchase a replacement annuity would be fully offset by the bonus on the replacement annuity”
***Well, interest rates have kind of sucked up until the end of 2022. Replacement annuities that are sold today have significantly better rates. And I am not sure what their argument is on the bonus- this is how bonuses offset existing surrender charges on replacements.***
– It was “found that ‘Client G’ made money on his annuity while ‘Client H’ was financially better off with the fixed indexed annuity that Cutter sold her than if she had stayed with the variable annuity that she previously owned, the memo says.”
***The SEC has not rebutted this fact.***
Check it out. -sjm
