MetLife 2006 Annual Report Download - page 139

wide inquiry by NASD examining sales of 529 plans. In November 2006, MSI and NASD reached a settlement resolving the matter, which
includes payment of a penalty and customer remediation. MSI neither admitted nor denied NASD’s findings.
In February 2006, the Company learned that the SEC commenced a formal investigation of New England Securities (“NES”) in
connection with the suitability of its sales of variable universal life insurance policies. The Company believes that others in the insurance
industry are the subject of similar investigations by the SEC. NES is cooperating fully with the SEC.
In 2005, MSI received a notice from the Illinois Department of Securities asserting possible violations of the Illinois Securities Act in
connection with sales of a former affiliate’s mutual funds. A response has been submitted and MSI intends to cooperate fully with the Illinois
Department of Securities.
A former registered representative of Tower Square Securities, Inc. (“Tower Square”), a broker-dealer subsidiary of Metlife Insurance
Company of Connecticut (“MICC”), is alleged to have defrauded individuals by diverting funds for his personal use. In June 2005, the SEC
issued a formal order of investigation with respect to Tower Square and served Tower Square with a subpoena. The Securities and
Business Investments Division of the Connecticut Department of Banking and NASD are also reviewing this matter. On April 18, 2006, the
Connecticut Department of Banking issued a notice to Tower Square asking it to demonstrate its prior compliance with applicable
Connecticut securities laws and regulations. In the context of the above, a number of NASD arbitration matters and litigation matters were
commenced in 2005 and 2006 against Tower Square. It is reasonably possible that other actions will be brought regarding this matter.
Tower Square intends to fully cooperate with the SEC, NASD and the Connecticut Department of Banking, as appropriate, with respect to
the matters described above.
Other Litigation
Roberts, et al. v. Tishman Speyer Properties, et al. (Sup. Ct., N.Y. County, filed January 22, 2007). This lawsuit was filed by a putative
class of “market rate” tenants at Stuyvesant Town and Peter Cooper Village against parties including Metropolitan Tower Life Insurance
Company and Metropolitan Insurance and Annuity Company. Metropolitan Life was initially a named defendant but the action has been
discontinued as to Metropolitan Life since it did not own the properties during the time period in question. This group of tenants claims that
the MetLife entities, and since the sale of the properties, Tishman Speyer as current owner, improperly charged market rents when only
lower regulated rents were permitted. The allegations are based on the impact of so-called J-51 tax abatements. The lawsuit seeks
declaratory relief and damages. Carroll v. Tishman Speyer Properties, et al. (Sup. Ct., N.Y. County, filed February 14, 2007). Asecond
putative class action was filed against the same defendants alleging similar claims as in the Roberts lawsuit, and in addition includes a
claim of unjust enrichment and purported violation of New York General Business Law Section 349. The Company intends to vigorously
defend against the claims in both actions.
Brubaker, et al. v. Metropolitan Life Ins. Co., et al. (D.C. Cir., filed October 20, 2000). Plaintiffs, in this putative class action lawsuit,
allege that they were denied certain ad hoc pension increases awarded to retirees under the Metropolitan Life retirement plan. The ad hoc
pension increases were awarded only to retirees (i.e., individuals who were entitled to an immediate retirement benefit upon their
termination of employment) and not available to individuals like these plaintiffs whose employment, or whose spouses’ employment, had
terminated before they became eligible for an immediate retirement benefit. The plaintiffs seek to represent a class consisting of former
Metropolitan Life employees, or their surviving spouses, who are receiving deferred vested annuity payments under the retirement plan and
who were allegedly eligible to receive the ad hoc pension increases. In September 2005, Metropolitan Life’s motion for summary judgment
was granted. Plaintiffs’ motion for reconsideration was denied. Plaintiffs appealed to the United States Court of Appeals for the District of
Columbia Circuit. The parties are currently briefing the appeal and oral argument is set for March 15, 2007.
The American Dental Association, et al. v. MetLife Inc., et al. (S.D. Fla., filed May 19, 2003). The American Dental Association and three
individual providers have sued the Holding Company, Metropolitan Life and other non-affiliated insurance companies in a putative class
action lawsuit. The plaintiffs purport to represent a nationwide class of in-network providers who allege that their claims are being
wrongfully reduced by downcoding, bundling, and the improper use and programming of software. The complaint alleges federal
racketeering and various state law theories of liability. The district court has granted in part and denied in part the Company’s motion
to dismiss. The Company has filed another motion to dismiss. The court has issued a tag-along order, related to a medical managed care
trial, which stays the lawsuit indefinitely.
Thomas, et al. v. Metropolitan Life Ins. Co., et al. (W.D. Okla., filed January 31, 2007). A putative class action complaint was filed
against Metropolitan Life, MetLife Securities, Inc. and MetLife Investment Advisors Company, LLC. Plaintiff asserts legal theories of
violations of the federal securities laws and violations of state laws with respect to the sale of certain proprietary products (as opposed to
non-proprietary products) by the Company’s agency distribution group. Plaintiff seeks rescission, compensatory damages, interest,
punitive damages and attorneys’ fees and expenses. The Company intends to vigorously defend against the claims in this matter.
Macomber, et al. v. Travelers Property Casualty Corp., et al. (Conn. Super. Ct., Hartford, filed April 7, 1999). An amended putative
class action complaint was filed against The Travelers Life and Annuity Company (now known as MetLife Life and Annuity Company of
Connecticut (“MLAC”)), Travelers Equity Sales, Inc. and certain former affiliates. The amended complaint alleges Travelers Property
Casualty Corporation, a former MLAC affiliate, purchased structured settlement annuities from MLAC and spent less on the purchase of
those structured settlement annuities than agreed with claimants, and that commissions paid to brokers for the structured settlement
annuities, including an affiliate of MLAC, were paid in part to Travelers Property Casualty Corporation. On May 26, 2004, the Connecticut
Superior Court certified a nationwide class action involving the following claims against MLAC: violation of the Connecticut Unfair Trade
Practice Statute, unjust enrichment, and civil conspiracy. On June 15, 2004, the defendants appealed the class certification order. In
March 2006, the Connecticut Supreme Court reversed the trial court’s certification of a class. Plaintiff may seek to file another motion for
F-56 MetLife, Inc.
METLIFE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)