Massachusetts Mutual Life Insurance Co. agreed to pay $1.6 million to settle charges that it misled customers about an obscure restriction in $2.5 billion of variable annuities it sold from 2007 to 2009, federal securities regulators said Thursday.
The Securities and Exchange Commission alleged that the Springfield insurance giant failed to fully explain a feature that capped the benefits for certain optional riders in the annuities. In a worst case scenario, investors could stop receiving annual income from the investments once the cap on withdrawals was reached.
The SEC said the cap wasn’t fully explained in either the company’s sales literature or its formal prospectus. But the SEC also noted that MassMutual stopped selling the riders in 2009 and revised the prospectus to better explain the consequences of making withdrawals. And after the SEC wrapped up its investigation, the company removed the cap altogether.
MassMutual spokeswoman Patty Norris Lubold said the company neither admitted nor denied the allegations.
“We are pleased to have resolved this matter with the SEC,’’ Norris said. “As the SEC notes in its announcement, no investors were harmed in this matter.’’