MetLife to pay $25 million in second-largest FINRA fine ever

May 04--MetLife Securities Inc. has been fined $20 million and ordered to pay customers $5 million for misrepresentations and omissions concerning variable annuities, regulatory officials said Tuesday.

The company represented to customers that their existing variable annuity was more expensive than the recommended investment, when in fact the existing one was less expensive, the Financial Industry Regulatory Authority said.

It represents the second-largest FINRA fine ever -- after a $100 million fine in 2002 involving Credit Suisse First Boston in partnership with another regulator -- and the largest involving variable annuities, officials said.

"Variable annuities are complex and expensive products that are routinely pitched to vulnerable investors as a key component of their retirement planning," said Brad Bennett, FINRA executive vice president and chief of enforcement. "Firms engaging in this business must ensure that the information on the costs and benefits of these products provided to customers is accurate, and that their registered representatives are sufficiently trained to understand and explain the risks and complex features of what they are selling. These obligations take on even greater importance when a significant part of a firm's marketing effort involves switching customers out of existing annuities."

The company neither admitted nor denied the charges, but consented to the entry of FINRA's findings, officials said.

A company spokesman said, "MetLife fully cooperated with the FINRA investigation and we are pleased to out this matter behind us."

The products generated at least $152 million in gross dealer commission for the firm over a six-year period, according to FINRA. Regulators found that from 2009 through 2014, the company misrepresented or omitted at least one material fact relating to the costs and guarantees of customers' existing annuity contracts in 72 percent of the 35,500 VA replacement applications it approved.

A Boca Raton-based, toll-free FINRA helpline for seniors is 1-844-574-3577.

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