Fran Tarkenton

Equity indexed annuities – Fran Tarkenton loves them

January 31, 2019

Fran Tarkenton loves equity indexed annuities. That does not mean you should. Tarkenton is 79 years old and encouraging elders to purchase equity indexed annuities (also called fixed indexed annuities) as a way to protect themselves from elder financial abuse. That’s right. Fran Tarkenton is encouraging elders to purchase these high fee, non-liquid insurance products instead of investing in low fee, highly liquid investments like broadly diversified stock and bond index funds. Tarkenton has even written a book touting equity indexed annuities as the answer to protecting seniors from financial abuse by family members. Here it is: Tarkenton has good reason to love equity indexed annuities — he sells them. They are good for him because they generate substantial commissions and fees for him. If you read this article, you will learn that Tarkenton owns some of these annuity products, but also lots of stocks. While family members do engage in elder financial abuse, so do financial advisors and insurance salesmen. Selling unsuitable equity indexed annuities to elders often is elder financial abuse because of their high fees and lack of liquidity. These annuities often have surrender periods of over 10 years. What happens when the elder investor needs money for medical expenses or long term care? The investor is out of luck – that’s what happens. Why do agents sell them to unsuspecting elders? Because the agent can earn an upfront commission from the insurance company of as much as 10%. A commission that is not disclosed to the purchaser. Purchasers of equity indexed annuities are not protected by law the same way that purchasers of mutual funds, stocks, bonds, and even variable annuities are. That is because the powerful insurance industry convinced Congress that equity indexed annuities are insurance products — not securities — even when folks hawking them are obviously selling them as investments. If those annuities are not part of an overall investment plan, you might not be able to recover damages in FINRA arbitration. I address the problems of annuities for retirees in another post that you can find here: Getting back to Tarkenton, here is another reason he might prefer to sell annuities, rather than securities products. Twenty years ago, Tarkenton settled SEC charges of engaging in a fraudulent scheme to inflate his company’s earnings. In its complaint, the SEC charged the following: “Tarkenton, Addington, Gossett, Fontaine, Hammersla, Alvarez and Welch engaged in a fraudulent scheme to inflate KnowledgeWare’s financial results to meet sales and earnings projections. In all, KnowledgeWare reported at least $8 million in revenue from sham software sales. KnowledgeWare “parked” inventory with software resellers and other supposed customers that were given the right not to pay for the software, either orally or in “side letters” that were kept separate from the other sales documents. As a result of this scheme, KnowledgeWare falsely reported record sales revenue and dramatic increases in earnings in press releases and in quarterly reports filed with the Commission and disseminated to the public in 1993 and 1994 (“Quarterly Reports”).” “Even when KnowledgeWare later restated those quarterly results, KnowledgeWare continued to mislead the investing public by […]

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Learn about crypto & blockchain at ABA Techshow

January 30, 2019

Join us at the ABA Techshow in Chicago – February 27 – March 2, 2019. The company will be warm and welcoming, whatever the weather. If you are confused about blockchain and cryptocurrency, our panel will help you make sense of it all. This is an area that all legal professionals need to understand. Here is a link to a primer on cryptocurrency and digital coins that I wrote for the ABA Law Practice Management Magazine: There is so much more at Techshow. Read about it here and then sign up.

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woman wagging finger

Court tells SEC, this is not a security

January 25, 2019

The 5th Circuit Court of Appeals reversed a district court’s order granting the SEC summary judgment based upon a finding that certain oil and gas interests were securities. The 5th Circuit provides a detailed analysis of whether the partnership interests satisfy the Howey test. This is well covered in Thomas Gorman’s blog SEC Actions @secactions and should be of interest to folks in the cryptocurrency and blockchain space.

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many choices at grocery store

More choice is not always better

January 14, 2019

According to traditional economics, having more choice is better than having less choice. But that is often not the case in the real world. Behavioral economics professor and Nobel Laureate Richard Thaler shows us that sometimes we are better off when we limit our choices.

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