NEW YORK - MetLife Inc. has received subpoenas from the attorney general of Florida and the insurance commissioner of Oklahoma seeking documents detailing compensation for, respectively, "intermediaries" and "insurance producers."
The New York-based insurance giant disclosed the actions in its quarterly report, filed Aug. 3.
The moves might signal a shift in focus by the regulators to how firms pay brokers and agents, said one industry lawyer who has recently had conversations with state securities regulators about the issue.
The lawyer, who asked not to be identified, said the recent $7.4 million settlement of American Express Financial Advisors Inc. of Minneapolis with the New Hampshire Bureau of Securities Regulation in Concord has galvanized state regulators on the topic. That case may be dissimilar from the one involving MetLife in that the latter is likely to involve institutional sales.
Particularly galling to regulators in the New Hampshire case were
e-mails pressuring reps with Minneapolis-based American Express Financial Advisors (now Ameriprise Financial) to sell proprietary funds, according to the lawyer.
"State regulators nationally have looked at the American Express settlement and are looking further at other firms and other issues," the lawyer said.
Of course, state regulators have been looking at issues such as incentives for brokers for years, stretching back to compensation for selling penny stocks back in the 1980s, industry observers said. The American Express Co. unit's settlement with New Hampshire is one of many cases involving the sale of mutual funds.
Referring to the North American Securities Administrators Association of Washington, the lawyer said: "NASAA is looking at the sale of proprietary products. Is it inappropriate?"
Rex A. Staples, general counsel of the organization for state and provincial securities regulators, did not return phone calls to comment.
NASD of Washington has not yet turned its full attention to that question, focusing more closely on issues such as sales contests, the lawyer said.
According to the lawyer, the question on state securities regulators' minds is: Does additional discovery need to be made? The local regulators are "using the New Hampshire settlement as a road map," the lawyer said.
A big concern to the states is whether firms are intimidating their sales forces to sell proprietary products, the lawyer said.
The Florida Department of Financial Services' Office of Insurance Regulation in Tallahassee has served MetLife with a subpoena for documents "concerning topics that include compensation paid to intermediaries," according to the MetLife filing with the SEC. The subpoena from the Florida attorney general's office was for copies of those documents, the filing states.
Oklahoma's insurance commissioner, meanwhile, is looking for "documents and information concerning the compensation of insurance producers for insurance covering Oklahoma entities and persons," according to MetLife's report.
MetLife has received similar subpoenas from the attorneys general of New York, Connecticut and Massachusetts.
The company is cooperating with all requests, it said in the report, and is "continuing to conduct an internal review of its commission payment practices."
The new subpoenas follow New York Attorney General Eliot L. Spitzer's investigation into the insurance brokerage business. John Calagna, a MetLife spokesman, said that while he could not comment on the specifics of each subpoena, they did not usually involve retail brokers or advisers.
Still, at this stage, determining the specific type of salesperson targeted by the regulators is difficult.
For example, JoAnn Carrin, a spokeswoman for the Florida attorney general's office, said the term "intermediaries" includes, but is not limited to, wholesalers, consultants, brokers and agents.
Jessica Fisher, a spokeswoman for the Oklahoma insurance commissioner's office, said that in the MetLife inquiry, the state investigation's impact on residents was potentially very small. "Not that many Oklahomans" may have been affected, she said, with the case focusing - as did Mr. Spitzer's probes of New York-based Marsh McLennan Cos. Inc. and others - on potential bid rigging by insurance producers.