MetLife Inc. announced that the Securities and Exchange Commission may file charges against the New England Life Insurance Co., one of its subsidiaries, after the unit received a Wells notice stemming from a previously disclosed investigation.
A Wells notice indicates that the SEC staff has made a preliminary decision to recommend that the commission bring a civil action. Recipients have the opportunity to respond to the SEC staff before a formal recommendation is finalized.
In 2003, one week after MetLife reported its second-quarter results, the company took a $31 million after-tax charge for that quarter due to improperly deferred expenses at New England Life. At the time of the announcement, MetLife dismissed four employees, including New England Financial president Thom Faria, according to the Boston Globe.
In August of that year, MetLife announced that the SEC had launched a formal investigation of New England Securities Corp. (NES), an indirect subsidiary of New England Life, noting that “certain systems and controls relating to one NES advisory program were not operating effectively.” It added the NES administrative system for the advisory program did not correctly rebalance asset allocations within certain investment manager accounts.
The company said at the time that it intended to make affected clients whole and estimated a pre-tax cost of between $3 million and $11 million to do so.