Equitable Financial Life settles SEC fraud charges

Equitable Financial Life Insurance Co. agreed to settle Securities and Exchange Commission charges that it provided materially misleading statements and omissions concerning investor fees to about 1.4 million variable annuity investors.

Equitable agreed to pay $50 million to harmed investors, most of whom are public school teachers and staff members, to settle the fraud charges, according to an SEC order released Monday. Equitable, which did not admit to or deny the SEC's findings, agreed to revise how it presents fee information in its variable annuity account statements, the SEC said.

"We didn't live up to our own high standards and our clients expect more from us," Equitable said in an emailed statement. "We are committed to learning from this, continuously enhancing our clients' experience and always providing clear and transparent communications."

Since at least 2016, Equitable provided quarterly account statements to about 1.4 million investors that included materially misleading statements and omissions concerning significant fees paid in connection with variable annuity investments, the SEC order said. Most the affected investors were invested in Equitable's proprietary EQUI-VEST variable annuities within a 403(b) or 457 plan, the SEC noted.

While Equitable gave investors the false impression that their quarterly account statements listed all fees paid during the period, the SEC's investigation found that its account statements "excluded the most significant fees that investors paid from the fees listed on the account statements. Instead, the account statements listed as fees only certain types of administrative, transaction and plan operating fees — most often amounting to zero or a very small number — which were in fact only a slight fraction of the overall fees paid by the investor."

The SEC's order found that Equitable violated the anti-fraud provisions of the Securities Act of 1933.

"When considering how to invest their hard-earned money and save for retirement, it is essential that investors not be misled about the fees they are paying," said Gurbir S. Grewal, director of the SEC's enforcement division, in a news release. "This case should serve as an important reminder to investment firms to carefully review their statements to ensure fee information is disclosed properly."

Equitable, the brand name of Equitable Holdings Inc. and its family of companies, including Equitable Financial Life Insurance Co., first disclosed in a 10-K filed in February that it was in talks with SEC to settle charges.