Nationwide Life Insurance will pay an $8 million penalty to the U.S. Securities and Exchange Commission over variable annuity and life insurance policy errors.
Nationwide Life Insurance Co., based out of Columbus, Ohio, agreed to pay $8 million over what the SEC says were deliberate delays in the receipt of variable annuity and life insurance policy orders which resulted in the failure to price policies in a timely manner.
The SEC says that during a 16-year span from October 1995 through September 2011, Nationwide instructed its mail couriers to avoid picking up orders until the end of the trading day (after 4:00 p.m. Eastern) even though many orders were received early in the morning. This delay allegedly violated Rule 22c-1, which requires that all orders received prior to 4:00 p.m. must be valued at the current day’s price, while orders received after 4:00 p.m. must be valued at the next day’s price.
The SEC also found that Nationwide actually complained to the post office on several occasions that due to a mix up of regular mail with variable orders, some of the orders were delivered prior to 4pm.
Afterward, according to the SEC’s complaint, Nationwide met with post office employees and “stressed that it needed ‘late delivery’ of variable contract mail ‘due to regulations that require Nationwide to process any mail received by 4 p.m. the same day.’”
Some of the couriers deliberately delayed their arrivals at the carrier’s home office by making pit stops to get gas or buy food, according to the SEC’s complaint.
Upon settling the SEC’s claims, Nationwide issued a statement stating that there was no allegation that Nationwide directly profited from the rule violations or benefitted certain investors over others.
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