Equitable (AXA) Preparing for $50 million SEC Civil Monetary Penalty
The penalty is related to an investigation into its sales and disclosure practices
Equitable (formerly AXA) disclosed in their September 30, 2021 10-Q SEC filing that they were “cooperating with the U.S. Securities and Exchange Commission (the “SEC”) concerning the SEC’s investigation into the Company’s non-ERISA K-12 403(b) and 457 sales and disclosure practices.” There was no additional information as to what those sales and disclosures practices are.
In Equitable’s latest filing, which reports their full year results they disclosed a settlement might be imminent:
“The Company has reached an agreement in principle, subject to agreement on documentation and approval by the SEC, to resolve that investigation, including the allegation that daily separate account and portfolio operating expenses disclosed in customer prospectuses and incorporated in the calculation of net investment portfolio results in quarterly account statements were not properly presented or referenced in those account statements. If approved, under the settlement, the Company would neither admit nor deny the allegations, prospectively modify the relevant account statements and cross-reference the relevant prospectus disclosures and pay a civil monetary penalty of $50 million, to be distributed to plan participants. The Company has fully accrued for the cost of the settlement.”
Without knowing exactly what the allegations are, there is no way to know whether $50 million is sufficient or if it will deter Equitable’s non-ERISA work force from engaging in alleged behaviors in the future. The company reported $2.8 billion in operating earnings for 2021 with net income of $439 million. The company will return $1.2 billion to shareholders via a newly authorized share repurchase program in 2022.
As more information becomes available, I will update.
Scott Dauenhauer, CFP, MPAS