-Attorney Newsletter-
The Massachusetts Mutual Life Insurance Company (usually known as “MassMutual”) has long been a major provider of annuities and other insurance products, both nationally and here in the San Francisco Bay Area. On November 15, 2012, the Securities and Exchange Commission (“SEC”) sanctioned MassMutual in the amount of $1.6 million for allegedly failing to properly disclose various risks associated with several of its popular annuity products.
Since September 2007, MassMutual has offered for sale variable annuities called “MassMutual Transitions Select” and “MassMutual Evolution” which were allegedly marketed to Bay Area seniors through prospectus and sales literature. These marketing materials allegedly failed to disclose to consumers various risks associated with certain Guaranteed Minimum Income Benefit riders (GMIB). Specifically, the sales literature allegedly concealed an existing “cap” on the GMIB rider. Once the cap had been reached, the GMIB would no longer accrue interest. The disclosures in MassMutual’s sales prospectus may have implied to some consumers that no such cap existed.
Many of MassMutual’s sales agents allegedly did not properly understand how the cap functioned, and may have provided erroneous financial advice to prospective consumers. Some sales agents mistakenly believed that the terms of the contract allowed contract owners to maximize their benefits by (1) allowing the GMIB value to reach its cap, (2) making an annual withdrawal of 5% to 6% of the annuity value, and (3) annuitizing their contracts in order to receive an income stream tied to the maximum GMIB value. Consumers who may have followed this advice could have severely harmed their future income streams, since the contract value declined with nothing left to annuitize, and therefore would decrease future income streams.
The SEC estimates that as much as $2.5 billion worth of MassMutual annuities may have been affected by the allegedly defective disclosures.
For more information on the MassMutual case, please refer to the SEC sanction order, available at http://www.sec.gov/litigation/admin/2012/ic-30264.pdf.
If you or a loved one purchased a retirement annuity from MassMutual since 2007, please contact The Evans Law Firm today for a free consultation. The Evans Law Firm litigates on behalf of clients in California who have purchased annuities which may have resulted in significant loss of investment. You may reach us by email at info@evanslaw.com, or call (888) 503-8267 or (415) 441-8669. We are among the nation’s leading litigators in the field of annuities fraud.
