The National Association of Securities Dealers will probably charge MetLife Inc.’s securities unit with failing to supervise adequately the sale of 529 college savings plans, MetLife says.
MetLife, New York, disclosed the agency’s warning in its quarterly financial statement filed with the Securities and Exchange Commission. According to that statement, NASD staff told MetLife Securities Inc. they had made a “preliminary determination” to recommend charging the firm with lax supervision over the suitability of college savings plans, also known as 529 plans, sold to some clients.
MSI intends to respond to the NASD charges and cooperate with the investigation, MetLife says. At press time, company spokesmen had not returned a call seeking additional comment.
The probe is part of a wider NASD investigation into sales of 529 plans by 20 brokerage firms. Recently, the agency fined Ameriprise Financial Services Inc. $500,000 for violating disclosure rules governing 529 plan sales (see NU, Oct. 31, 2005).
In another matter, MetLife has been served with a subpoena by the Insurance Commissioner of Oklahoma seeking information about its dealings with an insurance broker, Universal Life Resources, San Diego. The subpoena, issued by the U.S. Attorney for the Southern District of California, asks for documents about compensation of ULR producers selling MetLife products in Oklahoma.
MetLife says it is cooperating with the inquiry and conducting its own review of its commission payment practices.
A year ago, New York Attorney General Eliot Spitzer sued Universal Life for allegedly taking hidden payments from insurers for steering employee benefits business their way.