Securities Law News

MetLife Board Let Firm Withhold $500M in Annuities: Suit (1)

Jan. 22, 2019, 9:33 PMUpdated: Jan. 23, 2019, 2:21 PM

MetLife Inc.‘s board of directors are facing a shareholder lawsuit that says they didn’t stop the company from improperly withholding $500 million from annuity customers.

MetLife board members didn’t do enough to make sure the company paid out all owed annuities, the Jan. 18 complaint in the U.S. District Court for the Eastern District of New York said.

One MetLife product is a pension risk transfer, which allows pension plan administrators to purchase annuity contracts, according to the complaint. The transfer entitles pension beneficiaries to annuity benefits once they reach retirement age.

But MetLife didn’t make payments to around 30,000 people after it failed to try hard enough to locate them, according to the complaint. Because of this massive error, the board shouldn’t have told investors that MetLife had strong internal controls, the complaint said.

The board either knew or should have know that its failure to prevent the improperly withheld payments would pose “a risk of serious injury” to the company, according to the complaint.

MetLife defeated a would-be class action by annuity holders Jan. 16.

The company is “reviewing the complaint and will respond appropriately,” a MetLife spokesperson told Bloomberg Law Jan. 22.

The case is Kates v. Kandarian, E.D.N.Y., No. 1:19-cv-00393, complaint filed 1/18/19.

(Updated with comment from MetLife.)

To contact the reporter on this story: Jennifer Bennett in Washington at jbennett@bloomberglaw.com

To contact the editor responsible for this story: Jo-el J. Meyer at jmeyer@bloomberglaw.com

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