According to FINRA, Supreme Alliance LLC was censured and fined $80,000 for failing to establish and maintain adequate supervisory systems for variable annuity transactions and Regulation Best Interest compliance.

The firm's supervisory failures regarding deferred variable annuities were extensive. Supreme Alliance failed to establish systems or procedures reasonably designed to supervise whether registered representatives made reasonable efforts to obtain customer profile information needed to assess transaction suitability and whether transactions were in customers' best interests.

Specifically, the firm lacked procedures to ensure representatives obtained information about customers' risk tolerances and information about lost rider benefits before recommending variable annuity purchases or exchanges. The firm also did not have sufficient procedures to supervise whether customers were accurately informed about various features of recommended variable annuities.

The firm failed to document principal review and approval of multiple variable annuity applications. Between June 30, 2020, and April 25, 2022, the firm failed to establish policies and procedures reasonably designed to achieve Regulation Best Interest compliance.

From September 2019 to April 2022, the firm also failed to implement surveillance procedures to identify inappropriate variable annuity exchange rates. The firm maintained no policies explaining how it would monitor exchange rates, who was responsible for such surveillance, how often it would occur, what tools to use, or what parameters to consider.

Additionally, the firm failed to maintain adequate procedures for investigating the character and reputation of prospective registered representatives during the hiring process and failed to maintain records of those investigations.

Variable annuities are complex products with significant implications for investors' retirement security. Inadequate supervision of these products can result in investors purchasing unsuitable products or exchanging existing annuities inappropriately, potentially losing valuable benefits.

Investors considering variable annuities should carefully review all features, fees, and surrender charges before purchasing.