Insurance Company Settles SEC Charges for Misleading Account Statements on Variable Annuities

An insurance company settled SEC charges for providing retail investors with materially misleading quarterly account statements as to fees paid on variable annuities.

The SEC found that the insurance company presented fees in several sections of its variable annuity account statements that left an impression that all fees were shown. The SEC found that the insurance company excluded the more significant fees paid. The SEC found that approximately 1.4 million investors — primarily public school employees — received the misleading statements.

As a result, the SEC determined that the company violated Sections 17(a)(2) and 17(a)(3) of the Securities Act ("Fraudulent interstate transactions").

To settle the charges, the company agreed to (i) notify investors of the violation and modify the account statements to accurately reflect fees paid by investors, (ii) cease-and-desist and (iii) a $50,000,000 fine.