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Retirement Planning > Retirement Investing > Annuity Investing

Equitable to Pay $50M for Misleading Teachers on Annuity Fees

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What You Need to Know

  • The SEC says Equitable gave retirement investors the false impression that their quarterly account statements listed all fees paid.
  • About 1.4 million investors received the statements, according to the SEC.
  • The case involved Equitable’s proprietary “EQUI-VEST” variable annuities within 403(b) or 457(b) plans.

The Securities and Exchange Commission announced fraud charges late Monday against Equitable Financial Life Insurance Co. for providing account statements to about 1.4 million variable annuity investors that included materially misleading statements and omissions concerning investor fees.

Equitable agreed to pay $50 million to harmed investors, most of whom are public school teachers and staff members, to settle the charges.

Since at least 2016, Equitable gave investors the false impression that their quarterly account statements listed all fees paid during the period, according to the SEC’s order.

Most of the investors who received the account statements are teachers or other employees of kindergarten-through-12th-grade public school districts, who invest in Equitable’s proprietary “EQUI-VEST” variable annuities within a 403(b) or 457(b) defined contribution retirement plan, the order states.

Equitable “presented fees in several sections of its EQUI-VEST variable annuity account statements, including dollar values spread across various columns and rows, creating the false impression that all fees investors paid during the period were being detailed in the account statements,” the order states.

Equitable’s account statements, however, “excluded the most significant fees that investors paid from the fees listed on the account statements. Instead, the account statements listed as fees only certain types of administrative, transaction and plan operating fees — most often amounting to zero or a very small number — which were in fact only a slight fraction of the overall fees paid by the investor,” according to the SEC.

The SEC’s investigation found that, “in reality, the statements listed only certain types of fees that investors infrequently incurred and that more often than not the statements had $0.00 listed for fees.”

Gurbir Grewal, director of the SEC’s Division of Enforcement, said in a statement that “when considering how to invest their hard-earned money and save for retirement, it is essential that investors not be misled about the fees they are paying. This case should serve as an important reminder to investment firms to carefully review their statements to ensure fee information is disclosed properly.”

The SEC’s order finds that Equitable violated the antifraud provisions of the Securities Act of 1933.

Without admitting or denying the SEC’s findings, Equitable agreed to cease and desist from committing or causing any future violations of these provisions and to pay a $50 million civil penalty that it will distribute to affected investors.

Equitable also agreed to revise how it presents fee information in its variable annuity account statements.