On April 22, 2005, the Court entered the Notice of Voluntary Dismissal. The plaintiff voluntarily dismissed the action without prejudice, and the case is terminated.
The complaint alleges that during the Class Period, Linsco/Private Ledger Corporation (LPL) made false and misleading statements and omitted material facts concerning its undisclosed financial interests with third party suppliers of annuity contracts. The third parties paid monies and other incentives to have Variable Annuities steered to them by LPL without properly disclosing the preexisting arrangement to its customers.
The complint further alleges, that rather than providing independent and unbiased services for clients wanting to purchase Variable Annuities, LPL maintained secret contingent fee sharing agreements with a number of insurance company underwriters of annuity contracts. These activities cause insurance companies to collect higher premiums than would be paid absent these arrangements and result in LPL customers paying inflated premiums for the Variable Annuities.
According to a press release, a variable annuity is an insurance contract with characteristics causing it to be treated as an "investment" under the Securities Act of 1933. A Variable Annuity contract generally provides that the purchaser agree to a simple "lump sum" premium or scheduled fixed premiums for a pre-set number of years. The premiums are deposited into a separate account after deducting expenses, fees and charges specified in the contract. The premiums thus collected in the annuitant's separate account are available for tax deferred investment in one or more portfolios (called sub-accounts). Upon maturity of the annuity, the annuitant receives payment from the accumulated value in such amounts and upon the terms specified in the underlying investment contract.