New York Attorney General Eric Schneiderman has subpoenaed information from TIAA, the major insurance and investment firm, regarding its sales practices, said a person inside Schneiderman’s office briefed on the matter in an email Thursday.
The subpoenaing of information from TIAA, which reportedly handles retirement accounts for several million nonprofit employees across the country, comes after an Oct. 21 report from The New York Times detailed allegations of predatory sales practices used by the firm.
The Times story, which said TIAA representatives pressure customers into buying financial products that add little or no value for them but generate higher firm fees, was based in part on a whistleblower complaint filed by former TIAA workers with U.S. Securities and Exchange Commission regulators. The complaint was obtained by the Times.
The story also cited interviews with 10 former TIAA employees who said they were given hard-to-meet sales quotas, coupled with instructions from management to meet the quotas by increasing clients’ fears of having insufficient retirement funds and by finding other “pain points.”
The high-pressure sales tactic claims “echoed” some allegations found in the confidential Securities and Exchange Commission whistleblower complaint, the Times story said. The article further stated that the whistleblower complaint alleges that TIAA began a fraudulent scheme in 2011 to convert “unsuspecting retirement plan clients from low-fee, self-managed accounts to TIAA-CREF-managed accounts” that cost more.
Meanwhile, TIAA has said in the past, according to the Times, that its financial advisers and consultants do not get commissions on products they sell, a rule that helps to protect investment clients. But former employees reportedly told the Times that the firm gives out bonuses to salespeople who convince customers to purchase more expensive TIAA products and services.