The Equitable Financial Life Insurance Company will pay $50 million to settle fraud charges it misled 1.4 million variable annuity investors using statements that omitted or greatly reduced investor fees, the Securities and Exchange Commission announced.

The regulator also found that Equitable continued to omit the information after being informed about the lack of disclosure by a school district in 2017.

The Equitable agreed to pay the fine to harmed investors, most of whom are public school teachers and staff members, the SEC said yesterday.

Since at least 2016, Equitable “gave investors the false impression that their quarterly account statements listed all fees paid during the period,” according to the SEC’s order.

In reality, the regulator found that “more often than not” the statements showed $0.00 fees, omitting almost all charges and costs and instead listing only those fees investors infrequently incurred.

"When considering how to invest their hard-earned money and save for retirement, it is essential that investors not be misled about the fees they are paying," Gurbir S. Grewal, director of the SEC’s Division of Enforcement, said in a statement. "This case should serve as an important reminder to investment firms to carefully review their statements to ensure fee information is disclosed properly."

The SEC’s order found that Equitable violated the antifraud provisions of the Securities Act of 1933.

“Though affirmatively presenting an apparently all-inclusive picture of fees and expenses to investors, Equitable’s quarterly account statements actually detailed less than three percent of the revenue that Equitable received from its EQUI-VEST variable annuities,” the SEC said.

The account statements contained no clarifying language or reference to the prospectus to put the investor on notice that they instead had paid significant separate account expenses and portfolio operating expenses that could amount to thousands of dollars each year, the agency said.

The insurance company was made aware that the annuity account statements may have confused investors on fees paid in May 2017, when Equitable and other vendors met with the advisory committee to the school district with which Equitable did the most business in terms of both assets invested and number of investors, the SEC said.

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