Public school teachers have filed a class action lawsuit against The Variable Annuity Life Insurance Co., known as VALIC, according to a recent article in InvestmentNews by Darla Mercado. The teachers are suing on behalf of all individuals who bought a VALIC deferred annuity after Jan. 1, 1974, in order to fund a qualified retirement plan.
The teachers allege that VALIC sales representatives misrepresented and omitted to disclose material facts in selling them variable annuities for their 403(b) retirement plans. One of the main selling points of variable annuities is tax deferment. However, that benefit is wasted in retirement plans, which are already tax-deferred. With no tax advantage, the teachers were left with an inordinately costly investment with surrender charges for untimely withdrawals.
The VALIC representatives presented themselves as financial advisors, rather than sellers of insurance products, and were trained to target 403(b) plan participants, the complaint alleges. Because VALIC’s sales representatives presented themselves as knowledgeable financial advisers ? rather than insurance agents ? the teachers and other clients trusted them and bought variable annuities that they otherwise wouldn’t have purchased.
Anyone who holds a variable annuity in a tax-deferred account, such as an IRA, 401(k), or 403(b) plan, should consider that fact a red flag that warrants consultation with an attorney with experience in securities matters.
Page Perry is an Atlanta-based law firm with over 125 years collective experience representing investors in securities-related litigation and arbitration. While past results are not indicative of future success, Page Perry’s attorneys have recovered over $1,000,000 for clients on more than 30 occasions, and have aided clients who have been the victims of financial adviser abuse and scams. Page Perry’s attorneys are actively involved in counseling individual investors regarding their investment problems. For further information, please contact us.