Metlife, Cape Cod Advisor Caught in Massachusetts’ Crosshairs

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Secretary of the Commonwealth of Massachusetts William Galvin introduced two separate actions Wednesday towards Metlife, which didn’t make pension funds to retirees the agency presumed lifeless, and Francis Weller Jr., a Cape Cod funding advisor who ran a scheme with Stifel, Nicolaus & Firm and one of many agency’s brokers.

Galvin ordered Metlife to pay a positive of $1 million and supply again funds to lots of of retirees that the agency wrongly thought had been lifeless. These retirees earned pensions at their former employers, which at the moment are defunct, and when these companies closed down, their pension obligations had been bought to Metlife.

Galvin’s workplace discovered nearly all of the retirees affected inside two months of beginning its investigation, and about half of them had been nonetheless residing on the similar addresses Metlife had on file.

“MetLife acquired the duty to pay the staff’ pensions from their former employers, which bought their pension obligations to MetLife,” the order stated. “This made MetLife liable for paying the businesses’ former staff beneath a Group Annuity Contract. MetLife was required to maintain funds in reserve for these retirees and to make funds when the previous staff got here of age.”

In June, Galvin accused MetLife of defrauding buyers by wrongfully releasing reserves to spice up its backside line as an alternative of creating pension funds to lots of of retirees in that state.

In a separate motion, Galvin charged advisor Weller of Weller Asset Administration, with violating their fiduciary responsibility and failing to reveal conflicts of curiosity. In accordance with the criticism, the advisor was operating a scheme with a Stifel dealer to share shoppers. The dealer was receiving commissions for inventory suggestions in shoppers’ buying and selling accounts, and in alternate, Weller had entry to Stifel’s assets.

Over a five-year interval, shoppers paid over $1 million in commissions to the dealer/seller, whereas Weller was additionally charging his advisory payment. The battle was by no means disclosed to Weller’s shoppers, Massachusetts claims.

“Primarily, [Weller Asset Management] shoppers had been overpaying for companies they might have acquired elsewhere at a a lot decrease value,” the criticism says.

For Weller, the state is searching for disgorgement of income acquired from wrongdoing, an administrative positive and revocation of his registration as an advisor within the state. Stifel agreed to a positive of $300,000.

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