Annuity Advisor Settles With SEC Over Product Recommendations
What You Need to Know
Life insurers paid an average upfront commission of 6.8% for the variable annuities Lent sold.
The SEC says he should have considered offering the clients fee-based annuities.
The SEC also objected to the money market fund he used.
The U.S. Securities and Exchange Commission told an investment advisor that he should have considered fee-based variable annuities along with commission-based variable annuities when making product recommendations.
The SEC said Monday that it has accepted a $1.1 million settlement offer from the advisor, Raymond Lawrence Lent, in connection with concerns about Lent’s compensation disclosures for variable annuities and money market funds and concerns about the possible effects of compensation on his annuity recommendations and money market fund selection decisions.
Lent, the founder of Putney Financial, agreed to the settlement without admitting or denying the SEC’s findings.
“I’m glad the issue has been resolved satisfactorily,” Lent said in an interview. “We cooperated with the SEC from the beginning.”
The settlement was the result of concerns that turned up when the SEC conducted a routine cycle exam, and it involved operations that had gone through previous exams without incident, Lent said.
Since 1997, Putnam has been a hybrid practice that has received both commissions and fees, and the cumulative compensation has been well within the norms for comparable services, he added.
Raymond Lent: Lent began as an agent at Mutual Life Insurance Co. of New York and a registered securities sales representative at MONY’s securities arm in 1976.
He started Putney, a San Rafael, California-based registered investment advisor, in 1996.
Lent noted in the interview that Putney and its broker-dealer affiliate, Portsmouth Financial Services, have worked with thousands of clients, and that, in some cases, members of four different generations from the same family are doing business with Putney and Portsmouth.
The SEC’s views: The SEC examined Putney in September 2019 and also reviewed operations later, according to the SEC order describing the settlement.
The SEC found that, from April 2016 through October 2021, Putney recommended variable annuities that paid Portsmouth upfront sales commissions equal to an average of about 6.8% of the amount invested.
