According to FINRA, Gary Mark Goldberg was assessed a deferred fine of $25,000, suspended from association with any FINRA member in all capacities for 18 months, and ordered to pay $594,590 plus interest in deferred restitution to customers for making unsuitable variable annuity recommendations.

Goldberg recommended that customers who had or were establishing advisory accounts purchase B-shares of a particular variable annuity in their brokerage accounts, even though advisory shares of the same variable annuity were available. The advisory shares provided virtually identical living and death benefits, sub-account investment options, and other features as the B-shares, but at lower cost to customers. Goldberg and his firm earned a seven percent commission on B-share sales but no commissions on advisory share sales.

Goldberg also recommended that each customer transfer the B-shares from their brokerage account to their advisory account, usually within one business day of purchase. As a result, customers were required to pay annual advisory fees of 1.875 percent plus annual variable annuity fees that were 0.95 percent higher than if they had purchased advisory shares. Customers were also subject to a seven-year surrender fee from purchasing B-shares. Goldberg's customers who held B-shares have collectively paid approximately $594,590 in unnecessary fees as a result of the higher annual fees imposed by B-shares.

Investors should be aware that variable annuities come in different share classes with varying fee structures and commission arrangements. Representatives have an obligation to recommend share classes that are in customers' best interests rather than those generating higher commissions. This case demonstrates how unsuitable share class recommendations can result in customers paying tens of thousands of dollars in unnecessary fees over time.