A MetLife Inc. subsidiary and three other affiliates have been fined a total $1.2 million for alleged failures to ensure supervisors could review brokers' e-mails with the public.
A MetLife Inc. subsidiary and three other affiliates have been fined a total $1.2 million for alleged failures to ensure supervisors could review brokers' e-mails with the public.
The settlement that regulators announced Wednesday also resolves allegations that MetLife supervisors failed to properly monitor brokers' participation in outside business activities and private-securities transactions.
The Financial Regulatory Authority, an independent regulator of U.S. securities firms, said the fines are against MetLife Securities Inc., and New York-based affiliates New England Securities Corp., Walnut Street Securities Inc. and Tower Square Securities Inc.
The firms neither admitted nor denied the allegations under the settlement. John Calagna, a spokesman for MetLife, which is also based in New York, said his company cooperated with FINRA and "has enhanced its e-mail screenings for all four broker-dealers. We are pleased to have resolved this issue."
FINRA alleged that MetLife Securities and the affiliate broker-dealers had written procedures from March 1999 to December 2006 covering supervisors' obligations involving brokers' e-mails to the public. All securities-related e-mails were supposed to be reviewed by a supervisor, but there was no system in place enabling managers to directly monitor those e-mails, FINRA said.
Instead, the firms relied on brokers to forward e-mails to supervisors for review, FINRA said.
The firms encouraged managers to inspect brokers' computers for any e-mails that should have been forwarded. But that step wasn't required, and brokers were able to delete e-mails from their computers, rendering spot-checks unreliable, FINRA said.
Those and other alleged shortcomings allowed brokers to conceal any evidence in their e-mails suggesting misconduct. That included one case in which a broker allegedly stole nearly $6 million from clients and used the money for securities transactions to raise capital for real estate companies, FINRA said.
