Additionally, FINRA ordered MSI to pay $5m to customers for making negligent material misrepresentations and omissions on variable annuity (VA) replacement applications for tens of thousands of customers.
Reprimanding MetLife conduct, the regulatory body said that each misrepresentation and omission made the replacement appear more beneficial to the customer, even though the recommended VAs were more expensive than customers’ existing VAs.
During its investigation, the financial watchdog said that MSI’s VA replacement business generated at least $152m in commissions between over a 6-year period.
FINRA said from 2009 – 2014, MSI misrepresented or omitted at least one significant fact about 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.
Further, MSI failed to disclose to customers that the proposed VA replacement would reduce or eliminate important features in their existing VA, such as accrued death benefits, guaranteed income benefits, and a guaranteed fixed interest account rider.
FINRA executive vice president and chief of enforcement Brad Bennett said: "Variable annuities are complex and expensive products that are routinely pitched to vulnerable investors as a key component of their retirement planning.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below formBy GlobalData
"Firms engaging in this business must ensure that the information on the costs and benefits of these products provided to customers is accurate, and that their registered representatives are sufficiently trained to understand and explain the risks and complex features of what they are selling."