The $418 million Southeast Financial Credit Union has filed a suit against CUNA Mutual Insurance Society, CUNA Brokerage Services Inc. and one of its former representatives for alleged claims of misrepresentations regarding deferred compensation plans and variable annuities.

According to the Sept. 4 complaint, Southeast Financial contracted with former CUNA Mutual representative Daniel Balogh to develop a supplemental deferred compensation for the credit union's CEO, John Simmonds. The CU said it was not interested in strategies that would cause loss of deposits or principal. Balogh proposed a deferred compensation plan following 457(f) rules recommending that Southeast Financial make a $1.3 million deposit towards the plan. The amount would be used to fund the plan's accrual account and life insurance plan. The CU would receive the amount back at the end of a seven-year agreement.

Southeast Financial said the nearly $1.3 million was not used as a deposit but to purchase a variable annuity and a variable life insurance plan, according to the complaint. The CU said the "deposit" invested in products that exposed the principal to market forces.