The Securities and Exchange Commission announced on July 18, 2022, that Equitable Financial Life Insurance Company would pay $50 million to 1.4 million variable annuity investors. The company provided false or misleading statements and omissions to the investors, many of whom are public school teachers and staff.
How it worked
Frequently, the quarterly statements would show $0.00 in fees. The SEC’s investigation determined that Equitable excluded most of the larger fees typically listed on account statements. Instead, the statements showed administrative, transactional and operation fees. These fees amounted to a fraction of what investors paid. The fine will be distributed among the investors – the most affected ones were invested in Equitable’s EQUI-VEST program within the 403(b) or 457 plans.
According to the SEC order, the fraudulent statements go back at least as early as 2016. Equitable’s fraudulent actions are a violation of the Securities Act of 1933. It is a civil penalty where the company neither admits nor denies the SEC’s findings. Still, it does agree to cease and desist its actions and carefully review statements to better ensure accurate statement information.
A statement from Equitable
“We didn’t live up to our own high standards and our clients expect more from us,” Equitable said in a statement. “We are committed to learning from this, continuously enhancing our clients’ experience and always providing clear and transparent communications.”
While there are certainly larger violations and more egregious lapses in fiduciary duty, this is little consolation to the teachers and administrators trying to save for retirement.