Pacific Life Insurance Company faces a class action suit contending the company improperly sold variable annuities within qualified retirement plans.
The Newport Beach, Calif., carrier in a statement denies any wrongdoing and says it will contest the suit in court.
The plaintiff's attorney firm Milberg Weiss, New York, filed the case of Cooper v. Pacific Life (No. CV203-131) in U.S. federal district court, in Brunswick, Georgia.
Attorney Ronald Uitz, co-counsel in the case who is based in Washington, says the issue centers on whether Pacific Life made adequate disclosures that the main economic benefit of its product–tax deferral–was unnecessary for qualified plan investors.
In addition, the suit questions whether Pacific Life had the suitability screening procedures in place to make sure agents sold the product only to those who could benefit from it.
Earlier this year, a federal judge in Georgia certified the class and the law firm will soon begin notifying 120,000 purchasers of variable annuities that they may qualify as part of the class.
To qualify, a customer must have purchased a variable annuity within a qualified plan between Aug. 19, 1998, and April 30, 2002.
The suit claims that Pacific Life sold people variable annuities for their IRAs from funds rolled over from their retirement accounts without telling them that the tax-deferral aspect of the annuities had no value in an IRA because IRAs are already tax-deferred.
"Pacific Life strongly disagrees with the claims in the lawsuit and we are vigorously defending ourselves," the company said in a prepared statement.
Pacific Life distributed a client guide but only beginning in 2000, 2 years after the class action period began. Uitz said it was not until 2 years later that it contained an adequate disclosure notice.
