MetLife could face 'significant fine' over annuities

U.S. life insurance giant MetLife (MET) could face a "significant fine" for alleged violations of rules regarding sales of the retirement-income products known as variable annuities.

The Financial Industry Regulatory Authority notified the New York-based company on Sept. 25 that it will recommend disciplinary action against MetLife's affiliated broker-dealer, the firm disclosed in a quarterly filing Thursday.

The action by the Wall Street self-regulatory body would cover violations of FINRA rules "regarding alleged misrepresentations, suitability and supervision in connection with sales and replacements of variable annuities and certain riders on such annuities," the filing said.

Variable annuities are tax-deferred retirement products that let investors select among a variety of investment options. The product is a contract between an investor and an insurance company in which the insurer agrees to make periodic payments.

Although variable annuities are a popular retirement-income option, the Securities and Exchange Commission cautions that charges and fees assessed with the products "will reduce the value of your account and the return on your investment."

MetLife is cooperating with FINRA's investigation, the company filing said. But the insurance giant separately issued a statement saying it disagreed with the conclusions reached by FINRA and "will defend ourselves vigorously."

While MetLife did not disclose an estimate of the size of the potential FINRA penalty, the company did say that it is fully reserved for the cost.

MetLife shares closed up 3.59% at $51.69 after retreating from higher intra-day gains.