In a release dated Tuesday, May 2, 2016 FINRA announced it had fined MetLife Securities, Inc. $20 million dollars and ordered it to pay an additional $5 million dollars to customers of the firm in connection with repeated misrepresentations made by the company regarding variable annuity replacement applications. Typically the misrepresentations and omissions by MetLife made the replacement annuities seem beneficial to customers despite the fact that in many cases the replacement annuity was more expensive than the customers current annuity. According to FINRA, MetLife’s replacement business “constituted a substantial portion of its business, generating at least $152 million in gross dealer commission for the firm over a six year period.”
Replacement of insurance products, including annuities requires a thorough and complex analysis of the merits of each products feature and relative costs and benefits. Member firms are required to ensure that the analysis performed by its registered representatives be accurate and complete. According to FINRA, “ from 2009 through 2014, MSI misrepresented or omitted at least one material fact relating to the costs and guarantees of customers’ existing VA contracts in 72 percent of the 35,500 VA replacement applications the firm approved, based on a sample of randomly selected transactions.” Among the most common misrepresentations were that the replacement policy would be less expensive, when in fact, the replacement policy was more expensive, that important features would also be included in the Metlife replacement policy, when in fact they were eliminated, and the understatement of customers’ existing death benefits.
FINRA also found that it MetLife failed to adequately train and supervise its registered representatives when selling replacement policies, as well as provide adequate information regarding MetLife’s “Guaranteed Minimum Income Benefit” rider, which has been a key selling point of MetLife replacement policies. Specifically, MetLife registered representatives have failed consistently to accurately represent the costs and benefits of the rider.
Finally, FINRA cited MetLife for issuing misleading account statements to customers. From at least 2009 forward, statements have regularly represented to firm customers that they had paid no fees associated with replacement variable annuity contracts, when in fact, customers had paid substantial fees related to their annuity contracts.
If you believe you were the victim of broker/dealer misconduct related to the sale of a MetLife replacement variable annuity, or any other annuity or insurance contract, please contact Rob Linkin at Duggins Wren Mann & Romero, LLP to discuss your rights. Rob can be reached at (512) 744-9300 or at firstname.lastname@example.org.