In response to an NASD inquiry in September 2003 concerning late trading of mutual funds, MetLife Securities Inc. of New York, New England Securities, Inc. of Boston and Walnut Street Securities, Inc. of St. Louis – all owned by MetLife, Inc. – provided inaccurate and misleading responses despite having learned information raising serious questions about the accuracy of those responses, NASD said in a press release. The responses were coordinated by a working group consisting of employees from the three firms, staff from various departments of MetLife Group, Inc., and an outside law firm, according to NASD.
The release said the firms also learned additional facts over the next several months that contradicted their original responses, but failed until 14 months after they had originally responded to provide NASD with corrected information. Additionally, while the responding group told NASD they were not aware of any late trading transactions and each firm had policies and procedures in place to prevent late trading, the group had information that its response was inaccurate or misleading.
NASD also said the firms failed to produce responsive e-mails in a timely fashion during NASD’s investigation.
NASD concluded from the investigation that the MetLife securities firms violated federal securities laws, Securities and Exchange Commission rules and NASD regulations by:
- executing approximately 800 late trades;
- submitting inaccurate and misleading responses to regulatory inquiries;
- failing for many months to update, supplement or correct those responses;
- failing to establish and maintain adequate supervisory systems and written procedures to prevent or detect late trading;
- failing to capture the time of customer mutual fund orders;
- failing to produce responsive emails in a timely fashion, and
- failing to retain e-mails for the required three-year period.
The MetLife securities firms neither admitted nor denied the charges, but consented to the entry of NASD’s findings.