Magazine article American Banker

Florida Seeking to Block Sales of Retirement CD

Magazine article American Banker

Florida Seeking to Block Sales of Retirement CD

Article excerpt

Florida's insurance commissioner has entered the fray over a new deposit instrument that resembles an annuity, charging that it is being sold illegally in the state.

The commissioner, Tom Gallagher, has initiated administrative proceedings against Blackfeet National Bank, the Montana institution that offers the Retirement CD, ana American Deposit Corp., which developed the federally insured product.

The companies are charged with violating more than a dozen Florida statutes and codes. Florida has some of nation's most stringent laws against sales of insurance products by banks.

In a 12-page order issued last month, Mr. Gallagher said he has initiated an investigation of the two companies, outlined a series of alleged violations, and. ordered them to show why they should be permitted to solicit and transact insurance business in Florida.

May Put Banks on Guard

The insurance commissioner gave the companies until the middle of this month to respond to the charges.

Although the action is currently confined to Blackfeet, the action may put other banks on their guard about offering: the product, industry observers say.

"This could delay the product's introduction or make banks cautious about marketing it," said David W.: Roderer, partner at Winston & Strawn, Washington.

In his administrative order, Mr. Gallagher said he was moving against Blackfeet National Bank and American Deposit Corp. because the companies have been marketing the Retirement CD in Florida. …

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