Press Release: General American Life Insurance Company, Former Senior VP Settle Late Trading Charges
General American Life Insurance Company and its former senior VP William C. Thater settled SEC charges for enabling a late trading scheme that allowed a New York family to trade mutual funds after the 4 p.m. cutoff, diluting investor value by $3.3 million, resulting in a $3.3 million penalty for the company and $163,137 in penalties plus a three-year industry bar for Thater.
General American Life Insurance Company and former senior VP William C. Thater agreed to settle SEC charges for facilitating a late trading scheme involving mutual funds underlying variable insurance policies. Thater entered a written agreement granting a New York family exclusive rights to execute 79 trades after the 4 p.m. ET cutoff between February and November 2002, causing approximately $3.3 million in dilution to other investors; General American paid a $3.3 million civil penalty, while Thater paid $163,137 in disgorgement, interest, and penalties and was barred from association with brokers or investment advisers for three years. Both parties consented to the SEC order without admitting or denying guilt, with the Commission finding that General American ignored red flags and failed to prevent the illegal activity, violating securities laws related to mutual fund pricing and late trading.
General American Life Insurance Company and its former senior vice president, William C. Thater, settled SEC enforcement actions for their roles in a late trading scheme involving mutual funds held within variable insurance policies. Thater, based in Danbury, Conn., entered a written agreement granting a New York family exclusive privileges to submit, confirm, or cancel 79 mutual fund trades after the 4 p.m. ET cutoff between February 1 and November 18, 2002, which diluted the value of the underlying funds by approximately $3.3 million. Despite internal awareness of the agreement and suspicious trading patterns, General American personnel failed to investigate or halt the activity, violating their duty to protect all investors. As part of the settlement, General American paid a $3.3 million civil penalty, while Thater paid $163,137 in disgorgement, prejudgment interest, and civil penalties, and was barred from associating with any broker, dealer, or investment adviser for three years—with eligibility to reapply after that period. Both parties consented to the SEC’s order without admitting or denying the findings. The penalties are to be distributed to the harmed mutual funds, and both are required to cease and desist from violating key securities laws, including Rule 22c-1 and Section 10(b) of the Exchange Act. The SEC emphasized that such conduct, whether in direct mutual fund trading or embedded in insurance products, undermines market fairness and will be aggressively pursued.
Exhibits & Attached Documents (1)
Extracted insights
- $20.00M $20 million $10M–$100M
- $3.30M $3.3 million $1M–$10M
- $163K $163,137 $100K–$1M
- company general american life insurance company
- company metlife, inc.
- agency Securities and Exchange Commission
- person william c. thater
- General American Life Insurance Company settled charges for Late Trading Of Mutual Funds
- William C. Thater settled charges for Late Trading Of Mutual Funds
- General American Life Insurance Company paid civil penalty of $3.3 Million
- William C. Thater paid disgorgement, prejudgment interest and civil penalties totaling $163,137
- William C. Thater entered into written agreement giving New York Family Exclusive Late Trading Privileges
- New York Family purchased private placement life insurance policies for Approximately $20 Million
- New York Family submitted late trade requests between Feb. 1, 2002 To Nov. 18, 2002
- New York Family Late Trading diluted value of underlying mutual funds by $3.3 Million
- William C. Thater barred from association with Any Broker, Dealer Or Investment Adviser For Three Years
- SEC announced settled enforcement action against General American Life Insurance Company And William C. Thater
- General American Life Insurance Company is subsidiary of MetLife, Inc.
- William C. Thater is age 52
- William C. Thater resides in Danbury, Connecticut
General American Life Insurance Company, Former Senior VP Settle Late Trading Charges FOR IMMEDIATE RELEASE 2007-162 Washington, D.C., Aug. 9, 2007 - The Securities and Exchange Commission today announced a settled enforcement action against General American Life Insurance Company and a former senior vice president, William C. Thater, for their roles in a late trading scheme. General American is a St. Louis-based insurance company and subsidiary of MetLife, Inc. General American will pay a civil penalty of $3.3 million and Thater will pay disgorgement, prejudgment interest and civil penalties totaling $163,137 to settle charges that Thater permitted and General American failed to prevent late trading of mutual funds underlying one of General American's variable insurance products. The payments will be distributed to the affected funds. The Commission's order finds that Thater, 52, of Danbury, Conn., entered into a written agreement that gave a New York family exclusive late trading privileges in mutual funds underlying the private placement life insurance policies the family purchased from General American for approximately $20 million. �By permitting a wealthy family to late trade, William Thater elevated the interests of a few select individuals over other investors,� said Linda Chatman Thomsen, Director of the Commission�s Division of Enforcement. �Whether it�s late trading of mutual funds directly or those that are part of variable insurance products, the Commission will continue to hold individuals and entities accountable for wrongful practices that unlawfully favor some investors over others.� Merri Jo Gillette, Director of the Commission's Chicago Regional Office, said, "The Commission seeks to assure a level playing field for all investors, including investors in mutual funds. William Thater intentionally facilitated a late trading scheme and General American turned a blind eye to red flags, ignoring the interests of mutual fund investors who were harmed by this illegal conduct." The Commission's Order finds that from Feb. 1, 2002, to Nov. 18, 2002, the New York family submitted, confirmed, or cancelled 79 mutual fund trade requests after 4 p.m. ET. As a result of the New York family's late trading, the value of the underlying mutual funds was diluted by approximately $3.3 million. Certain General American personnel became aware of the written agreement and the late trading activity, but failed to take adequate steps to investigate the activity and ensure that it ceased. The Commission's Order requires in addition to the civil penalties that General American cease and desist from committing or causing violations of Sections 17(a)(2) and 17(a)(3) of the Securities Act of 1933 and Rule 22c-1 under the Investment Company Act, and comply with certain undertakings. The Order requires Thater to cease and desist from committing or causing violations of Sections 17(a)(1) and 17(a)(3) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and Rule 22c-1 under the Investment Company Act. The Order also requires Thater to pay disgorgement, prejudgment interest and civil penalties, and be barred from association with any broker, dealer or investment adviser with the right to reapply after three years. General American and Thater have consented to the Commission's Order, without admitting or denying the findings. # # # Merri Jo Gillette Regional Director SEC Chicago Regional Office (312) 353-9338 Robert Burson Senior Associate Regional Director SEC Chicago Regional Office (312) 353-7428 Additional materials: Adminstrative Proceeding No. 33-8832 http://www.sec.gov/news/press/2007/2007-162.htm Home | Previous Page Modified: 08/09/2007
General American Life Insurance Company, Former Senior VP Settle Late Trading Charges FOR IMMEDIATE RELEASE 2007-162 Washington, D.C., Aug. 9, 2007 - The Securities and Exchange Commission today announced a settled enforcement action against General American Life Insurance Company and a former senior vice president, William C. Thater, for their roles in a late trading scheme. General American is a St. Louis-based insurance company and subsidiary of MetLife, Inc. General American will pay a civil penalty of $3.3 million and Thater will pay disgorgement, prejudgment interest and civil penalties totaling $163,137 to settle charges that Thater permitted and General American failed to prevent late trading of mutual funds underlying one of General American's variable insurance products. The payments will be distributed to the affected funds. The Commission's order finds that Thater, 52, of Danbury, Conn., entered into a written agreement that gave a New York family exclusive late trading privileges in mutual funds underlying the private placement life insurance policies the family purchased from General American for approximately $20 million. �By permitting a wealthy family to late trade, William Thater elevated the interests of a few select individuals over other investors,� said Linda Chatman Thomsen, Director of the Commission�s Division of Enforcement. �Whether it�s late trading of mutual funds directly or those that are part of variable insurance products, the Commission will continue to hold individuals and entities accountable for wrongful practices that unlawfully favor some investors over others.� Merri Jo Gillette, Director of the Commission's Chicago Regional Office, said, "The Commission seeks to assure a level playing field for all investors, including investors in mutual funds. William Thater intentionally facilitated a late trading scheme and General American turned a blind eye to red flags, ignoring the interests of mutual fund investors who were harmed by this illegal conduct." The Commission's Order finds that from Feb. 1, 2002, to Nov. 18, 2002, the New York family submitted, confirmed, or cancelled 79 mutual fund trade requests after 4 p.m. ET. As a result of the New York family's late trading, the value of the underlying mutual funds was diluted by approximately $3.3 million. Certain General American personnel became aware of the written agreement and the late trading activity, but failed to take adequate steps to investigate the activity and ensure that it ceased. The Commission's Order requires in addition to the civil penalties that General American cease and desist from committing or causing violations of Sections 17(a)(2) and 17(a)(3) of the Securities Act of 1933 and Rule 22c-1 under the Investment Company Act, and comply with certain undertakings. The Order requires Thater to cease and desist from committing or causing violations of Sections 17(a)(1) and 17(a)(3) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and Rule 22c-1 under the Investment Company Act. The Order also requires Thater to pay disgorgement, prejudgment interest and civil penalties, and be barred from association with any broker, dealer or investment adviser with the right to reapply after three years. General American and Thater have consented to the Commission's Order, without admitting or denying the findings. # # # Merri Jo Gillette Regional Director SEC Chicago Regional Office (312) 353-9338 Robert Burson Senior Associate Regional Director SEC Chicago Regional Office (312) 353-7428 Additional materials: Adminstrative Proceeding No. 33-8832 http://www.sec.gov/news/press/2007/2007-162.htm Home | Previous Page Modified: 08/09/2007