NU Online News Service, Aug. 13, 2003, 5:23 p.m. EDT – The U.S. Securities and Exchange Commission has started a formal investigation of New England Securities Corp., a unit of MetLife Inc., New York.

The SEC began the investigation after New England Securities told the SEC that “certain systems and controls relating to one New England Securities advisory program were not operating effectively,” MetLife says in a statement.

“NES is cooperating fully with the SEC and is continuing to research the effect, if any, of this issue upon approximately 6,000 active and closed accounts,” MetLife says.

The New England Securities administrative system for the advisory program did not correctly rebalance asset allocations within certain investment manager accounts, MetLife says.

“The company intends to make affected clients whole and currently estimates a pre-tax cost of between $3 million and $11 million to do so,” MetLife says.

MetLife acquired New England Securities when it acquired New England Financial.

In related news, Moody’s Investors Service, New York, says it has “some concerns about MetLife’s financial controls and financial management systems” because of a restatement of statutory earnings that MetLife announced in 2002 and an announcement earlier this week that MetLife will have to reduce its reported second-quarter earnings by $31 million as a result of improperly deferred expenses at New England Financial.

“Moody’s will, in the near term, be reviewing the company’s financial reporting and management process,” Moody’s says.

But Moody’s praises MetLife’s ongoing effort to shift responsibility for financial reporting from executives at its business units to executives at the corporate level.

Centralizing reporting “should help to strengthen financial controls,” Moody’s says.