WASHINGTON (CN) - Massachusetts Mutual Life Insurance will pay $1.6 million to settle an SEC complaint that it failed to disclose a cap it placed on a complex investment that customers planned to use for retirement, the SEC said.
In a statement announcing its settled lawsuit, the SEC said: "The SEC's investigation found that MassMutual included a cap feature in certain optional riders offered to investors, and the cap potentially affected $2.5 billion worth of MassMutual variable annuities. Neither the prospectuses nor the sales literature sufficiently explained that if the cap was reached, the guaranteed minimum income benefit (GMIB) value would no longer earn interest. MassMutual's disclosures instead implied that interest would continue to accrue after the GMIB value reached the cap, and dollar-for-dollar withdrawals would remain available to investors. A number of MassMutual's own sales agents were confused by the language in the disclosures, and investors were not sufficiently informed of the potential negative effect of taking withdrawals if they reached the cap approximately a decade from now."
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