MassMutual Settles Disclosure Issue With SEC for $1.625 Million
The Securities and Exchange Commission announced today that Massachusetts Mutual Life Insurance Company has removed a cap on an investment product which may have reduced payouts on certain variable annuities purchased by investors as retirement income vehicles.
Although the cap was rescinded before any investors were harmed, the SEC charged MassMutual with securities law violations, which the company has agreed to settle and pay a $1.625 million penalty.
At issue was a complicated retirement annuity product and certain riders which contained a cap that would limit interest earnings on the product's guaranteed minimum income benefit value. According to the SEC, the insurer's disclosure language implied that this was not the case, which prompted sales agents to give incorrect information to investors. This could have caused some investors to make withdrawals later in the life of the investment instrument that could have put their investment at risk.
The SEC noted that the voluntary removal of the caps by MassMutual was taken into consideration in the amount of the penalty levied.
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