Misleading

  • Why is this flimflammery allowed to continue?
  • Where are the laws to prevent companies from misleading people?  

--  Senator Howard Metzenbaum (D-OH)

1993 0525 - GOV (Senate) - When Will Policyholders Be Given The Truth About Life Insurance?, Senator Howard Metzenbaum (D-OH)  ---  [BonkNote] 

  • (Northwestern Mutual Life: A Century of Trusteeship by Harold F. Williamson and Orange A. Smalley, Northwestern University Press, ©1957,
  • It goes on: "Even the more modest claims for this type of policy proved to be misleading because of two trends...
    • one was the increasing life expectancy in the United States,
    • the other the continued fall in the rate of interest ....
  • [O]ver longer intervals survivors ultimately collected much smaller dividends than they had been led to expect." (op. cit.)
  • This sounds eerily like the situation today.

--  William C. Koenig

1991 - SOA - Disclosure Systems: Can an Ideal Method be Found?, Society of Actuaries - 22p

  • While it is possible to make some sort of cost comparison in these cases on the basis of cost in a given year per $1,000 of net protection, such comparisons apparently can be misleading in some cases when the original policy is an endowment or retirement income policy or a limited payment policy.

--  Walter Young

1969 - SOA - Life Net Cost Comparisons, Society of Actuaries - 34p

  • 359 The statements made in the 2007 Form 10-K press release of February 28 2008 and conference call of February 29 2008 were materially false and misleading in at least the following respects.
    • As described above Defendants knew that AIG faced significant risk of being subject to tens of billions of dollars of additional collateral calls arising from it CDS portfolio Defendants also knew that the overwhelming portion of the cash collateral received from borrowers under AIGs securities lending program was invested in RMBS and other asset backed securities that such securities were becoming increasing illiquid and that demands by borrowers for the return of their cash collateral would severely strain AIGs liquidity
    • As result the following statements among others touting AIGs financial strength and capital position were materially false and misleading:
      1. with diverse portfolio of global businesses strong capital base and outstanding talent AIG has the ability to absorb the current volatility Sullivan February 28 press release
      2. AIG has the financial strength to meet our performance goals and build long-term shareholder value Sullivan February 28 press release
      3. AIG is well positioned to grow shareholder value despite the current turbulent environment Sullivan February 29 investor call and
      4. AIG has strong capital base and we are not raising additional capital Sullivan February 29 investor call Indeed less than three months later AIG would announce equity offerings of $12.5 billion which would have severe impact on its earnings per share among other metrics.  (p156-157)

2012 - LC - Pacific Life Funds and Pacific Select Fund vs AIG - 12-CV-6071 - Complaint for Violations of The Federal Securities Laws - 241p

  • Mr. DeAngelo responded that the New Jersey Unfair Trade Practices Act on false advertising is only one paragraph long and the department has been criticized for not telling the industry in its regulations what is false and misleading, for example.
    • No other regulators spoke in support of the ACLI suggestion, so it will not be included in the next draft.
  • Mr. DeAngelo said there had been a suggestion that Section 2A(1)(c) be revised.
    • He said if materials for agents are misleading or incomplete, then agents may in turn mislead the public.
    • He asked if regulators were interested in deleting the language that says "which is designed to be used or is used to induce the public… ."
  • Mr. Hanson said he would like to see all training materials included and Mr. Burch said he was also in favor of deleting the language.
  • Mr. DeAngelo said he did not recall seeing incorrect or misleading training materials, so this is somewhat a theoretical question.
  • Mr. Hanson responded that he had seen misleading materials in market conduct examinations.
  • Diana Marchesi (Transamerica) said this language would then be broad enough to include material designed to inspire agents to sell more for the company.
    • All of the information in the regulation would then need to be included in that inspirational brochure.
  • Mr. DeAngelo asked if there is a middle ground, such as requiring the regulation to apply to material that describes to the producer the features, advantages or disadvantages of an insurance product.
    • The regulators agreed that was an appropriate compromise.
  • What the regulators really want to say is that the agent training materials should not be misleading or incomplete.
  • Mr. Burch said that he has been convinced that the requirement for agent training materials should be deleted and the rest of the regulators agreed.

1999-4, NAIC Proc. - Unfair Trade Practices