Secretary of State William F. Galvin, Massachusetts' top securities regulator, fined MassMutual broker-dealer subsidiary MML Investment Services $250,000, claiming the firm failed to supervise a broker who allegedly defrauded clients by pressuring them into buying unsuitable, high-commission insurance products.
As part of a consent order filed by Galvin's Securities Division on Tuesday, MML, without admitting to or denying the findings, agreed to pay the fine and disgorge any profits related to the unlawful actions of the broker and to conduct an internal review of its supervisory procedures.
The Securities Division also filed a separate complaint against the broker, Charles J. Evan, on Tuesday, seeking to ban him permanently from operating in Massachusetts.
Evan was terminated by MML in October 2019, two years after rejoining the firm, "in connection with allegations concerning inappropriate traditional insurance sales practices," according to a disclosure on his report at the Financial Industry Regulatory Authority's BrokerCheck website. He was previously with MML for five years.
He "aggressively pushed clients into variable annuities, while falsely claiming not to be receiving commissions for the sale of those products," all in an effort to "line his own pockets," Galvin said in a news release on Wednesday.
Evan was barred from associating with any FINRA member firm in any capacity after he refused to provide documents and information requested by FINRA while it was investigating his termination from MML.
Without admitting to or denying the industry self-regulating group's findings, Evan signed a FINRA letter of acceptance, waiver and consent on Dec. 31, 2019, in which he consented to the sanction. FINRA signed the letter on Jan. 22, 2020.
Commenting on the fine, a MassMutual spokesperson said Wednesday: "We take compliance with securities laws very seriously and cooperated fully with the inquiry. We are pleased to have resolved this matter."
