Compliance April 16, 2010

MetLife Settles Charges of Improper Payments to Insurance Broker

The Metropolitan Life Insurance Company (MetLife) will pay $13.5 million to the federal government to settle charges it made improper payments to a San Diego-based insurance broker.
Reported by

A statement from U.S. Attorney Karen P. Hewitt, chief federal prosecutor for the Southern District of California, said the payments were not disclosed to MetLife’s customers or reported by MetLife as required by the Employee Retirement Income Security Act (ERISA). According to the Non-Prosecution Agreement entered into by the company, MetLife knowingly implemented a program of undisclosed and unreported payments designed to induce the San Diego-based insurance brokerage firm and its CEO to recommend MetLife to the brokerage firm’s clients.

MetLife’s sales force was also instructed to leverage the improper payments to promote MetLife products. The agreement also calls for MetLife’s continuing cooperation on any investigations arising out of the conduct described in the agreement.

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ERISA requires the administrators of qualified insurance plans to provide certain specified information (including all commissions and fees paid to insurance brokers in connection with the purchase of group insurance) to the U.S. Department of Labor Employee Benefits Security Administration (EBSA) and the Internal Revenue Service (IRS).

Prosecutors alleged the company made these payments without disclosing them to the insurance plan administrator and that the payments were typically carried as communication fees, request-for-proposal (RFP) fees, or enrollment fees. These hidden fees were, in turn, generally included in the rates charged by MetLife to customers.

Hewitt said that she agreed to a negotiated settlement of this matter because of MetLife’s cooperation in the investigation and remedial steps it has taken since.

Products April 16, 2010

Keeley Asset Management Launches Alternative Value Fund

Keeley Asset Management Corporation has announced the national launch of the KEELEY Alternative Value Fund.
Reported by

The fund is a newly created series of Keeley Funds, Inc. and offers two share classes, Class A (KALVX) and Class I (KALIX).  It will be managed using an alternative strategy, combining the research of Keeley Asset Management with the active risk management techniques of the fund’s sub-adviser, Broadmark Asset Management LLC, according to an announcement.   

The fund will seek to provide incremental downside market protection through Broadmark’s tactical hedging process.  Its investment objective is to achieve long-term capital appreciation, as well as to protect capital during adverse market conditions.  

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For the equity investments, the fund intends to pursue its investment objective by investing in companies with small and mid-size market capitalizations, defined as $7.5 billion or less. The adviser will focus the equity investments primarily on individual stocks undergoing corporate restructuring including corporate spin-offs, companies emerging from bankruptcy, companies selling at or below actual or perceived book value, savings and loan and insurance conversions, and distressed utilities, the announcement said. 

John L. Keeley Jr. will serve as portfolio manager for the long-only equity exposure of the fund, which will be constructed similar to the KEELEY Small-Mid Cap Value Fund (KSMVX). Christopher J. Guptil of Broadmark will serve as portfolio manager of the tactical risk management segment of the strategy. 

Registered investment advisers can purchase Class I shares on behalf of their clients with less than $1 million per account, if the total investment of all investing client accounts is $1 million or more. Other institutional investors, such as defined contribution plans, might also qualify for purchasing institutional shares with less than $1 million per account, subject to certain specified conditions. 

To learn more about KEELEY Alternative Value Fund, contact Jim Stamper, vice president, at 312.786.5059 or info@keeleyfunds.com.

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