World Financial Group

World Financial Group

Type	Subsidiary
Industry	Financial services
Founded	1991 (under Aegon ownership)
Headquarters	11315 Johns Creek Parkway Johns Creek, Georgia 30097-1517
Products	Annuities College savings plans Debt relief Identity theft protection Life insurance Long-term care Mutual funds Retirement plan Segregated fund Unit investment trusts
Parent	Transamerica
Website	Official website

World Financial Group (WFG) is a multi-level marketing company based in Johns Creek, Georgia, a suburb of Atlanta, which sells investment, insurance, and various other financial products through a network of distributors in the United States, Canada, and Puerto Rico.^[1][2] It is wholly owned by Transamerica, a subsidiary of Aegon.^[3]

History

World Marketing Alliance (WMA) was founded by Hubert Humphrey after he left Primerica in 1991. The original name was Alexander, Inc. but shortly thereafter was renamed World Marketing Alliance. The original idea was that the baby boomers needed a solution for wealth creation and tax protection, and that the "buy term and invest the difference" philosophy of Primerica (formerly A.L. Williams) could be better addressed with variable universal life insurance.

While in A.L., Humphrey created and introduced the Business Format System (BFS), a business sales and recruiting methodology. Williams continued to develop the methodology in WMA.^[4] MD TV, the company's private satellite television network, was also introduced during this period. The company expanded its operations to Canada, Taiwan, Mexico, Puerto Rico, Guam and the Philippines.^[4] The company held its first convention in Las Vegas in 1992. It was attended by about 2,000 associates.^[4]

World Financial Group associates are compensated by selling financial services products and receiving commission overrides from people that agents sponsor into the company.^[5] Associates use "six fundamentals of personal finance" to build financial plans. These fundamentals are cash management, debt management, emergency fund creation, insurance protection (includes life insurance, critical illness insurance, disability insurance etc...), asset accumulation and estate preservation.^[6]

On March 23, 1998, WMA Executive World Headquarters opened in Duluth, Georgia. The 100,000-square-foot (9,300 m²) building housed 500+ employees.^[4]

In November 1998, WMA was fined $100,000 "for not properly supervising its sales agents" after their clients lost nearly $2 million in unregistered investments.^[7][8] In 2000, WMA was fined $125,000 "for failing to report nearly 900 customer complaints".^[9]

In June 2001, select assets of WMA were purchased by AEGON and renamed World Financial Group, Inc.^[10] Humphrey retained WMA Mortgage Services, Inc. and the original logo, which was used in his subsequent companies World Leadership Group and Hegemon Group International. As part of the conditions of sale, Humphrey was placed on a noncompete agreement and could not compete in the insurance industry until 2013. Following the sale of WMA to Aegon, Alexander Wynaendts, chief executive of AEGON, was quoted as saying, "When we took the company over, we put in place very strict regulatory and compliance procedures".^[11]

World Financial Group has over 3,500 offices in the United States.^[12] The World Financial Group Canadian division, World Financial Group Insurance Agency of Canada Inc., moved to Toronto, Ontario in February 2012.^[13] In 2008, World Financial Group had over 80 Canadian offices and over 1,500 agents.^[14]

On July 1, 2013, The MFDA announces that effective immediately, the WFG Securities of Canada Inc. securities dealer is now, Transamerica Securities Inc.^[15]

Provider companies

WFG works with hundreds of product provider companies, including mutual funds and unit investment trusts, and various insurance and financial services-related companies.^[16][17]

Regulatory issues

WFG's stated mission goal is to "serve the financial needs of individuals and families typically overlooked by the financial services industry".^[18] It is yet unclear how successfully the company has managed to distance itself from its more controversial U.S.-based predecessor WMA, associated with fraud, misrepresentation and false statements, and the subject of class action lawsuits, and National Association of Securities Dealers (NASD) disciplinary action.^[19][20] In preparation for Aegon's acquisition in 2001, "World Marketing Alliance 'ramped up' compliance before the acquisition".^[21] As reported in the same Bloomberg article, Aegon's Chief Executive Officer Alexander Wynaendts said on Bloomberg TV that "When we took the company over, we put in place very strict regulatory and compliance procedures, Of course, when you have such large numbers of people out there in the field, it is quite an effort. We feel comfortable that we now have the regulatory issues under control."^[21]

• In March 2011, the Financial Industry Regulatory Authority (FINRA) reported that World Group Securities (WGS) had incurred ten regulatory penalties since 2004.^[22]
• A 2004 NASD disciplinary action report summarized disciplinary actions against WGS. According to the report, WGS "submitted a Letter of Acceptance, Waiver, and Consent in which the firm was censured and fined $15,000. Without admitting or denying the allegations, the firm consented to the described sanctions and to the entry of findings that the firm permitted representatives to act in registered capacities while their registrations were inactive due to their failure to satisfy the Regulatory Element of NASD's Continuing Education Requirements. NASD also found that the firm failed to establish and maintain a supervisory system reasonably designed to assure compliance with the Regulatory Element of the Continuing Education Requirement by its registered representatives."^[23]
• In December 2006, WGS and one of its brokers were fined $150,000 by Missouri's commissioner of securities for selling unsuitable products to elderly people.^{[11][2][24][25]} Other cases of private arbitration "where variable annuities were allegedly sold to people too old to realize any benefit before they died" were also reported. Utah's Division of Securities has cited at least four WGS brokers since 2006.^[21][26]
• In April 2007, WGS was fined $50,000 for failing to supervise its representatives in the State of Utah, who were misrepresenting their credentials and services rendered during free lunch seminars targeting seniors.^{[2][1][27][28][29]}
• In April 2010, WGS was fined in excess of $850,000 as the result of the unauthorized sale of private securities by some of its agents in the State of Arizona.^[30][31]
• In November 2010, the SEC ordered WGS to pay, among other things, a civil monetary penalty in the amount of $200,000 for the fraudulent selling of unsuitable securities in the State of California, which were funded using home equity, derived from the refinance of the customers' homes into subprime mortgages.^{[32][33][34][35]}
• WFG Securities (Canada) was under investigation by the Manitoba Securities Commission in 2008, after some investors say they ended up in financial situations they did not understand regarding leveraged accounts. The securities commission noted that that World Financial Group "did not have adequate controls and mechanisms in place to fully supervise the leveraged accounts." WFG Securities paid a $250,000 settlement to rectify the situation. Dennis Villarin of Winnipeg, MB, a former agent who opened and trained others to open the above accounts, was stripped of his licensing and charged by the MFDA. They noted that Dennis Villarin and his trainees "made it appear to WFG's supervisory and compliance staff as though the clients satisfied WFG's requirements regarding the use of leveraging, as set out in its policies and procedures."^[36][37]
• In 2013, WFG Securities (Canada) was restructured and rebranded by Transamerica Corporation and is now known as Transamerica Securities of Canada Inc.

References

1. "Petition to Revoke License" (PDF). Securities.utah.gov. Retrieved 2015-07-31.
2. "Aegon in Missouri Provokes Regulators Finding Sales Deceptions". Bloomberg. May 28, 2008.
3. "2005 Annual Report". AEGON Review of Operations: Americas. Archived from the original on October 23, 2006. Retrieved February 2, 2007.
5. Lubove, Seth (May 28, 2008). "Dutch Insurer's U.S. unit draws scrutiny from regulators". The New York Times. Retrieved May 4, 2012.
6. "C1 Rail". The Pantagraph. Bloomington, Ill. November 9, 2009. Retrieved May 4, 2012.
7. "Arizona Corporation Commission Orders Securities Firm to Pay $2,000,000 for Not Properly Supervising Their Sales Agents" (PDF) (Press release). Arizona Corporation Commission. November 25, 1998. Archived from the original (PDF) on March 23, 2014.
8. "Arizona Corporation Commission Cracking down on Unauthorized Sale of Securities Products" (Press release). Arizona Corporations Commission. 16 January 1998. Retrieved 15 October 2014.
9. "Brokers pointing finger at WMA". Investmentnews.com. 2001-03-05. Retrieved 2015-07-31. (subscription required)
10. "World Financial Group". Work From Home Directory. Archived from the original on June 23, 2012.
11. Seth Lubove (May 28, 2008). "Dutch insurer's U.S. unit draws scrutiny from regulators". International Herald Tribune. Bloomberg News. Archived from the original on May 31, 2008.
12. Shepke, Kevin (August 10, 2001). "Flyers happy to bank on Schultz". Daily Herald. Arlington Heights, Illinois. Retrieved May 4, 2012.
13. "World Financial Group's Canadian Headquarters Relocating To North Toronto's Financial District" (Press release). World Financial Group of Canada. 27 February 2012. Retrieved 16 October 2014.
14. Tayti, Mark (December 8, 2008). "Making sound financial decisions". Welland Tribune. Retrieved May 4, 2012.
15. "Change of Name" (PDF). Mutual Fund Dealers Association of Canada. July 2, 2013. Retrieved 2015-07-31.
16. "WFG Industry Partners". World Financial Group. Archived from the original on June 14, 2012.
17. "AmRes earns $3.5 million". Mortgage Lane. May 23, 2005. Retrieved May 4, 2012.
18. "The World Financial Group Difference". World Financial Group. Archived from the original on February 13, 2008.
19. "Business Wire press release". Business Wire. October 22, 2001.
20. "NASD Regulation Fines WMA Securities, Inc. $125,000 for Failure to Report Customer Complaints". Financial Industry Regulatory Authority, Inc. August 15, 2000. Archived from the original on July 1, 2008.
21. Seth Lubove (May 28, 2008). "Aegon in Missouri Provokes Regulators Finding Sales Deceptions". Bloomberg. Archived from the original on June 29, 2011. Retrieved 2015-07-31.
22. "FINRA Broker Check: World Group Securities". Financial Industry Regulatory Authority, Inc. Retrieved 2015-07-31.
23. "Monthly Disciplinary Actions" (PDF). Financial Industry Regulatory Authority, Inc. December 2004. Retrieved 2015-07-31.
24. Erica Gage, Computer Info Tech Specialist (2006-12-06). "SOS, Missouri - Securities: News Releases". Sos.mo.gov. Retrieved 2015-07-31.
25. "Missouri Securities :: World Group Securities, Inc. : Case AP-06-48". Sos.mo.gov. Retrieved 2015-07-31.
26. "State Regulators Investigate World Financial for Deceptive Sales Practices". Stock Broker Fraud Blog. 2008-06-10. Retrieved 2015-07-31.
27. Archived July 27, 2011, at the Wayback Machine.
28. "Stipulation and Consent Order : World Group Securities" (PDF). securities.utah.gov. Archived from the original (PDF) on 2010-11-13. Retrieved 2015-07-31.
29. "Stipulation and Consent Order as to Andrew J. Moleff" (PDF). Securities.utah.gov. Retrieved 2015-07-31.
30. "In the matter of World Group Securities, Inc., et al. (S-20735A-10-0130); Proposed Order for Relief and Consent to Same" (PDF). Images.edocket.azcc.gov. Retrieved 2015-07-31.
31. "Thomas S. Blackwell : Cease and Desist Proceddings" (PDF). Securities and Exchange Commission. Retrieved 2015-07-31.
32. "Kederio Ainsworth, Guillermo Haro, Jesus Gutierrez, Gabriel Paredes, and Angel Romo: Lit. Rel. No. 20768 / October 3, 2008". Securities and Exchange Commission. 2008-10-03. Retrieved 2015-07-31.
33. "Securities and Exchange Commission v. Kederio Ainsworth, Guillermo Haro, Jesus Gutierrez, Gabriel Paredes, and Angel Romo" (PDF). Securities and Exchange Commission. Retrieved 2015-07-31.
34. "SEC News Digest (Issue 2010-220; November 22, 2010)". Securities and Exchange Commission. Retrieved 2015-07-31.
35. "Order Instituting Administrative Proceedings Pursuant to Section 15(b) of the Securities Exchange Act of 1934 : World Group Securities, Inc." (PDF). Securities and Exchange Commission. Retrieved 2015-07-31.
36. "Securities" (PDF). Msc.gov.mb.ca. Retrieved 2015-07-31.
37. "In the Matter of a Disciplinary Hearing Pursuant to Sections 20 and 24 of By-law No. 1 of the Mutual Fund Dealers Association of Canada : Re: Dennis Villarin" (PDF). Mfda.ca. Retrieved 2015-07-31.

External links

• Official website