Finra slaps MassMutual B-D with $250,000 fine for not promptly reporting customer complaints

The disclosures that MML Investors Services delayed making included customer complaints and arbitrations, criminal charges and bankruptcies.

Finra Tuesday fined MML Investors Services, the retail broker-dealer unit for giant insurer MassMutual, $250,000 over the firm’s more than two years of neglecting to update brokers’ work histories and records to include dozens of customer complaints and other matters.

The brokers at issue weren’t named in the settlement, which MML Investors Services agreed to without admitting or denying the Financial Industry Regulatory Authority Inc.’s findings in the matter.

“We cooperated fully with Finra and we are pleased to have resolved this matter,” a company spokesperson said in an email. The firm was also censured.

MML Investors Services has 1,409 branch offices with approximately 7,300 registered employees, according to Finra. The settlement was spurred by Finra’s investigation into the timeliness of MML’s disclosures related to one of its former registered representatives.

Securities industry rules require broker-dealers to report the hiring and departures of financial advisors and brokers on disclosures known as Forms U4 and Forms U5.

“From December 2018 through February 2021, MML failed to timely amend its [financial advisors’] Forms U4 and Forms U5 to report 39 customer complaints and dispositions, criminal charges, regulatory actions, and other disclosable events and failed to establish and maintain a supervisory system reasonably designed to ensure the timely reporting of disclosable events during that time,” according to the Finra settlement.

The disclosure delays ranged from three days to more than 1,100 days after the firm received notice of the reportable events at issue, including customer complaints and arbitrations, criminal charges, bankruptcies, internal reviews and investigations, and regulatory actions, according to Finra.

“For example, on June 10, 2020, MML learned that an arbitration had been filed against a former registered representative by an MML customer alleging that the former representative misrepresented and/or omitted material facts related to the sale of a life insurance policy,” according to Finra. “However, MML failed to timely amend the former registered representative’s Form U5 to disclose the arbitration until September 23, 2020, 75 days late.”

“Similarly, MML learned of felony charges involving fraudulent sales practices against another former registered representative in August 2020, but failed to timely amend the representative’s Form U5 until January I2, 2021, approximately four months late, after Finra inquired about the representative’s conduct,” according to the regulator.