Overview
An action filed last week derivatively on behalf of MetLife alleges that certain of the company’s officers and directors breached fiduciary duties and applicable law and insurance regulations when they failed to check the federal government’s “Death Master File” to determine when death benefits were owed to plan beneficiaries. The complaint alleges that the defendants were quick to check the death list to determine when MetLife annuity policyholders had died so that MetLife could immediately stop making annuity payments, but were less vigilant about checking for the deceased who had life insurance policies that needed to be paid out. The plaintiffs claim that the scheme was uncovered by a fraud probe by the New York Attorney General, and that when MetLife disclosed in an SEC filing that it anticipated a loss of $115 to $135 million, MetLife’s market capitalization dropped $17.4 billion off its high of $47.9 billion eight months before. The complaint also alleges that, as a result of management’s unlawful activities, MetLife is the subject of a federal securities fraud lawsuit in the SDNY, doing further damage to MetLife and, derivatively, its shareholders. MetLife thus finds itself in the unenviable position of being sued by its shareholders in part because it is being sued by its shareholders.