According to the Financial Industry Regulatory Authority (FINRA), it has fined MetLife Securities, Inc. (MetLife) $20 million and ordered it to pay $5 million in restitution for misrepresenting and omitting material information in connection with variable annuity switches.
FINRA found that, during the period 2009 to 2014, MetLife misrepresented the costs and guarantees of its customers’ existing variable annuity contracts in a whopping 72 percent of the 35,500 replacement annuity contract samples reviewed by FINRA. According to FINRA, MetLife made the replacement annuities sound more beneficial for the customers even though the replacement annuities usually cost more than the customers’ existing annuities. Annuity switches generated around $152 million in gross dealer commission for MetLife over a six-year period.
Some of the examples of misconduct cited by FINRA in its news release include:
- Misrepresenting that the replacement annuity was less expensive than the existing annuity when in fact, it wasn’t; and
- Omitting from the disclosure that the replacement annuity would reduce or eliminate critical features of the existing annuity such as, accrued death benefits, guaranteed income benefits, and guaranteed fixed interest account riders.
FINRA also found that MetLife’s registered representatives did not obtain and assess accurate information about the replacement annuities or receive adequate training on how to compare the relative costs and guarantees in an annuity switch.
MetLife did not admit or deny the charges, but consented to the entry of FINRA’s findings.
Variable annuities are securities with insurance features and it is possible to lose money. If you own a variable annuity, you may be presented with an option to exchange or replace it. Variable annuities typically provide high compensation to the brokerage firm and stockbroker who sell it to you and they may be incentivized to sell you a new annuity. If you are considering exchanging or replacing your annuity, be sure to closely compare it with your existing annuity, and only make a switch if it is better for you, and not just better for broker.
If you have lost $100,000 or more in a variable annuity, contact the securities lawyers at McCabe Rabin at 877.915.4040 for a free consultation.