Hartford Financial Services Group will pay $115 million to settle market-timing and broker-compensation charges brought by the Attorney General offices of Connecticut, New York and Illinois.
The three state regulators charged that the Hartford insurance unit failed to properly oversee hedge funds that were engaging in market-timing sales of its variable annuities. New York Attorney General Andrew Cuomo said his investigation also found that Hartford invested into a hedge fund that was market-timing Hartford’s variable annuities, reaping nearly $16 million in profits from the hedge fund, while hiding its role and profit to customers.
The Connecticut Attorney General said his investigation revealed that Hartford also provided fictitious quotes to insurance brokers including the Marsh & McLennan Companies. He stated that Hartford provided Marsh with the intentionally high and noncompetitive bids, knowing it could “deceptively create the mirage of a competitive market–with the understanding that it could win other desirable future business from Marsh,” adding, “Hartford colluded with brokers and agents to pay concealed contingent commissions to get steered business.”
Hartford was ordered to establish an $84 million compensation fund for investor-victims of the market timing activities and $5 million to compensate commercial property-casualty policy holders harmed by the improper quotes. The company will also pay a $20 million penalty to New York and $3 million to both Connecticut and Illinois.
Shepherd Smith and Edwards represents investors nationwide in claims of wrongdoing by members of the securities industry. If you, your firm or your pension fund sustained losses as a result of fraud, negligence or other acts or omissions you may be able to recover all or part of your losses. Contact us to arrange a free consultation with one of our attorneys.