MetLife To Pay Record Fine Of $25M

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MetLife To Pay Record Fine Of $25M

MetLife has agreed to pay $25 million to settle an investigation of abuses pertaining to variable annuities. That penalty is the greatest amount ever paid for violations regarding those products. From that $25 million, $20 million will go to FINRA as a fine and $5 million will be paid to customers for negligent misrepresentations and omissions, said FINRA. MetLife neither admitted nor denied any wrongdoing.

According to Brad Bennett, FINRA’s Chief of Enforcement, “Variable annuities are complex and expensive products that are routinely pitched to vulnerable investors as a key component of their retirement planning. Firms engaging in this business must ensure that the information on the costs and benefits of these products provided to customers is accurate.”

Regulators have been scrutinizing variable annuities more and more. These products can combine securities investments with guaranteed income, an arrangement that may create attractive fees for insurers.

According to FINRA, the investigation related to abuses from 2009 to 2014, including cases where the broker-dealer misrepresented to customers that new annuities were cheaper than the products they were replacing. FINRA also said that MetLife also sometimes failed to tell customers that new annuities would reduce or eliminate some benefits.

During that time span, MetLife misrepresented or omitted at least one material fact in 72% of the 35,500 variable annuity replacement applications that the insurer approved. Even still, according to FINRA, MetLife’s principals approved the applications over 99% of the time.

FINRA additionally discovered that the clients paid a large amount in “fees and charges,” even though such costs were usually listed as $0.00 in quarterly account statements.

If you or someone you know has lost money as a result of an investment or Ponzi scheme, please contact Richard Frankowski at 888-741-7503 to discuss your potential legal remedies or complete the contact form.

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