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ERISA and NASD/Variable Contracts
ERISA has many very specific requirements as it relates to product and producer relationships. If a case involves an ERISA plan, duties of the producer and the carrier can be elevated simply because it is covered under ERISA. The many different plans covered by ERISA require the participants in any transaction to be completely compliant with the rules and regulations imposed upon them.

The NASD, now FINRA, (Financial Industry Regulatory Authority) has promulgated rules and requirements in the sales and service of variable life and annuity contracts. Issues range from those involving compliance and illustrations to licensing and suitability issues. The sponsoring Broker/Dealer has responsibilities and duties relating to compliance and supervision imposed upon it by the FINRA and state securities departments.

There are many different licenses offered by the NASD, with each license giving the broker specific and greater authority to perform a higher level of service or offer a different level of product. From an insurance perspective, many agents have only the lowest level of licensure allowing only the sale of variable life and annuity products. This level of licensure also allows the sale of mutual funds and other packaged products.

Virtually every broker dealer will supply licensed brokers with a manual or practice guide outlining what is acceptable behavior and practice and what is prohibited. These manuals will cover virtually all aspects of the relationship between the broker and the broker dealer.

Broker dealers are also responsible for the supervision and compliance of their brokers. Several different duties are specifically placed upon the broker dealer in relation to compliance, oversight, product, supervision, suitability, advertising and the handling and delivery of clients’ money, among many others.

Get more information regarding ERISA and NASD (FINRA)/Variable Contracts Cases.