Chicago Business Litigation Lawyer Blog
A lot of people lost money in the recent economic downturn. Stocks plummeted, 401K accounts shrank overnight, and for most people, there was nothing that could have been done to prevent it. In some instances, though, an investor’s loss was a direct result of negligence or fraud on the part of the company that was supposed to be protecting their money.
According to the Securities and Exchange Commission (S.E.C.) that is exactly what allegedly happened to investors who trusted their money to MassMutual Financial Group, an insurance company based in Springfield, Massachusetts. Bill Lloyd worked for MassMutual for 22 years and allegedly had a reputation for being a straight arrow. Unlike the stereotypical agent who is interested only in making money for himself, Lloyd truly cared about his customers. As a result, when he encountered a situation in which his customers were allegedly getting ripped off, Lloyd could not let it slide.
In 2007, when money was gushing into variable annuities, MassMutual added two income guarantees: Guaranteed Income Benefit Plus 6 and Guaranteed Income Benefit Plus 5. The idea behind these products was that they would guarantee that the annuity income stream would grow to a predetermined cap regardless of how the investment itself performed.
When the investors retired, they could take six percent (or five percent, depending on which product they bought) of the cap for as long as they wanted or until it ran out of money, and still be able to annuitize it at some point. In theory, the money would never run out, and that is how agents like Lloyd were allegedly told to sell the product to customers. Before long, investors had put $2.5 billion into these products.
In 2008 it allegedly became evident that the products did not work they way customers had been told they would work. As a result of the market’s fall, it was according to Lloyd all but certain that thousands of customers were going to run through their income stream within seven or eight years of withdrawing the money. Continue reading ›