LAWSUITS NEWS & LEGAL INFORMATION
Illegal Compensation
Omaha, NE: (May-14-08) Connecticut Attorney General Richard Blumenthal brought charges against Mutual of Omaha, claiming that the company illegally paid over $1 million in concealed compensation to brokers between 1999 and 2004. The suit also stated that Mutual received inside information on pension plan contracts it was seeking, in exchange for the illegal payments it made.
In its defense, Mutual of Omaha said that it acknowledged compensating the brokers, but denied any wrongdoing. It also stated that it had disclosed the additional broker compensation as expenses or administrative costs, something that Blumenthal said, resulted in concealing the nature of the payments and inflating the cost of the annuities. Blumenthal stated that pension plans typically rely on brokers to evaluate and recommend annuities due to their complex nature. He said the additional compensation brokers received influenced their recommendations.
As part of a settlement reached in the case, Mutual of Omaha has agreed to a $1.7 million payout, to end the investigation. Further, the company agreed to establish a $1.5 million fund to refund premiums to pension plan sponsors that bought policies between 1999 and 2004 that included additional payments to brokers. It will also pay a $195,000 penalty to Connecticut and change company practices. [THE BOSTON GLOBE: MUTUAL OF OMAHA AGREES TO $1.7 MILLION IN SETTLEMENT]
Published on May-20-08
In its defense, Mutual of Omaha said that it acknowledged compensating the brokers, but denied any wrongdoing. It also stated that it had disclosed the additional broker compensation as expenses or administrative costs, something that Blumenthal said, resulted in concealing the nature of the payments and inflating the cost of the annuities. Blumenthal stated that pension plans typically rely on brokers to evaluate and recommend annuities due to their complex nature. He said the additional compensation brokers received influenced their recommendations.
As part of a settlement reached in the case, Mutual of Omaha has agreed to a $1.7 million payout, to end the investigation. Further, the company agreed to establish a $1.5 million fund to refund premiums to pension plan sponsors that bought policies between 1999 and 2004 that included additional payments to brokers. It will also pay a $195,000 penalty to Connecticut and change company practices. [
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