The Financial Industry Regulatory Authority (FINRA) slammed MetLife Securities, Inc. (MetLife) with a $25 million fine for negligent misrepresentations and omissions to customers regarding the costs and guarantees relating to variable annuities. MetLife agreed to the fine, which includes a $20 million fine and $5 million to be paid to customers, without admitting or denying FINRA’s findings.
From approximately 2009 to 2014, FINRA found that MetLife falsely told customers that new variable annuities were less costly than the annuities they were replacing. Further, MetLife made the replacement annuities appear more beneficial to the customer when they were typically more expensive. According to FINRA, MetLife sold at least 43 billion in variable annuities which generated $152 million in gross dealer commissions for the firm. Nonetheless, MetLife failed to supervise its registered representatives to ensure they were property trained and informed of the comparative analysis between the variable annuities and the recommended replacement annuities. In fact, FINRA found that MetLife principals approved 99.79% of the variable annuity replacements, even though three-quarters (3/4) of the replacement applications contained at least one misrepresentation or omission.
FINRAs findings also state that since 2009, MetLife sent its customers misleading quarterly statements which understated the charges and fees on certain variable annuities. For instance, the quarterly statements stated that the total fees and charges were $0.00 when the customer had actually paid a substantial amount.
This is not the first time MetLife has been fined for supervisory failures. FINRA’s BrokerCheck report shows a total of 33 disclosure events, including a $1.2 million fine in 2009 for its failure to supervise its employees’ securities-related email communications.
In order to protect customers, FINRA rules require broker-dealers to establish and implement a reasonable supervisory system. These rules require supervisors to monitor firm activities to ensure they comply with federal and state securities laws, securities industry rules and regulations, as well as the brokerage firm’s own policies and procedures. If broker-dealers do not establish and implement such protective measures, they may be liable to account holders for damages stemming from a lack of supervision and misrepresentations. As a result, investors whose brokers have misrepresented their investments can bring forth claims to recover damages against broker-dealers, like MetLife, which have a duty to oversee its registered representatives in order to protect their customers’ interests.
Has your broker misrepresented your variable annuity? Have you suffered losses due to misrepresentations and/or omissions relating to your annuity investments? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation. Mr. Pearce is accepting clients with valid claims against MetLife stockbrokers for unsuitable recommendations, misrepresentations and/or omissions, and other fraudulent misconduct.
The most important of investors’ rights is the right to be informed! This Investors’ Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 35 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities, and investment law issues. The lawyers at our law firm are devoted to protecting investors’ rights throughout the United States and internationally! Please post a comment, call (800) 732-2889, send Mr. Pearce an email at email@example.com, and/or visit our website at www.secatty.com for answers to any of your questions about this blog post and/or any related matter.