%1

A Los Angeles jury on Wednesday said MetLife and two of its affiliates should pay $15.6 million to a woman who said she was swindled in a reported Ponzi scheme that had links to a MetLife insurance agent, the New York Times DealBook blog reported yesterday. The plaintiff, Christine Ramirez, a retiree, invested nearly $280,000 in the scheme, which lost $200 million for investors when it collapsed nearly a decade ago. Several of those investors sued MetLife, saying that the insurer had ignored or failed to notice signs that agents and brokers were peddling the investment to retirees and others. After an eight-week trial, the jury awarded Ramirez $10 million in punitive damages from MetLife Inc., $2.5 million in punitive damages from a MetLife subsidiary, New England Securities, and $2.5 million in punitive damages from a second subsidiary, the New England Life Insurance Company, along with $330,000 in punitive damages to be paid by a former managing partner. It awarded compensatory damages of more than $230,000 on Tuesday.

Life Partners customers who invested in roughly 3,400 life-insurance policies must decide by today between two competing plans from life-settlement firms Vida Capital Inc. and BroadRiver Asset Management, which are fighting to manage the lucrative Life Partners $2.3 billion portfolio, the Wall Street Journal reported today. The plans offer an array of payout scenarios and fees explained in more than a thousand pages of dense legal language. A bankruptcy judge approved the wording earlier this year. Federal bankruptcy rules require that plans sent to creditors be written in simple language. But a Wall Street trader who specializes in distressed trading said he can’t tell what recovery rates would be under the different scenarios. Through Life Partners, a life-insurance policyholder sold his or her policy at a discount to an investor for immediate cash. Life Partners brokered the transactions for a fee. Buyers of the policies continued paying the premiums hoping to get a profit when the insured person dies and the policy pays out. Many Life Partners customers said in interviews that lacking clarity before Monday’s voting deadline, they don’t know whom to trust. In written statements and at meetings each group held in Florida, California and other states, Vida Capital and BroadRiver accused each other of trying to disguise unreasonable customer fees. The firms jointly published a 30-page comparison chart in which each presented cost data using metrics that were different from the other’s.

MetLife Inc. on Monday filed a brief calling on a federal appeals court to uphold a decision that stripped the insurance giant’s status as a systemically important financial institution (SIFI), saying that the Financial Stability Oversight Council (FSOC) had exceeded its legal authority by issuing the SIFI designation, MorningConsult.com reported yesterday. In a legal brief filed at the U.S. Court of Appeals for the District of Columbia Circuit, MetLife reiterated its stance that FSOC’s 2014 decision was “arbitrary and capricious” under the 2010 Dodd-Frank Act. In a March decision, District Court Judge Rosemary Collyer sided with MetLife. The Justice Department appealed the ruling. FSOC effectively moved the legal goalposts by taking away its due process and not coming up with alternatives to a SIFI designation, according to MetLife.

MetLife has settled some cases with its own customers who were duped by the Diversified Lending Group (D.L.G.), but a current batch of lawsuits involves people who did not buy its insurance, the New York Times reported today. D.L.G. crashed in 2008, when the Securities and Exchange Commission sued Bruce Friedman, accusing him of misappropriating millions of dollars in investor funds. According to court documents, he operated a Ponzi scheme that defrauded hundreds of investors, including a sitting congressman, of more than $200 million. Claimants in the current lawsuits were not customers of MetLife, but put their money in the D.L.G. investment that was pitched to them by sales people, some who were affiliated with MetLife and some who were independent contractors approved to sell its products. As such, the legal fight raises questions about how far a large company’s liability should extend. MetLife has argued in court documents that it “had no relationship with D.L.G.” and that it “did not sell, or materially assist in the sale” of the D.L.G. financing program. Neither was it legally obligated to supervise the brokers who made the sales, MetLife said, because they were contractors and licensed through another, unaffiliated broker-dealer, even though authorized to sell MetLife insurance products.

The U.S. government on Friday appealed a court decision that major insurer MetLife cannot be considered "too big to fail" in the United States Court of Appeals for the District of Columbia, Reuters reported. U.S. Treasury Secretary Jack Lew had said that he strongly disagreed with the decision and the government would vigorously defend the work of the Financial Stability Oversight Council (FSOC), made up of several U.S. regulatory agency chiefs, which designated MetLife as a systemically important financial institution in 2014. The designation triggers additional oversight and capital requirements. MetLife sued the U.S. government last year, saying FSOC used a secretive, flawed process in determining that it could hurt the U.S. financial system if it faces financial distress. On March 30, U.S. District Judge Rosemary Collyer rescinded the designation.

A judge invoked broad legal grounds to rescind federal oversight of MetLife Inc., calling into question the process the Obama administration has used to bring other large insurers under the Federal Reserve’s thumb, the Wall Street Journal reported today. U.S. District Judge Rosemary Collyer, who last week overturned regulators’ determination that distress at MetLife could put the economy at risk, yesterday unsealed her written opinion in the case. She took regulators to task for an “unreasonable” decision that didn’t consider potential costs and relied on a process that was “fatally flawed.” The administration is expected to appeal the ruling in the coming weeks, but hasn’t said explicitly that it will do so.