Nationwide Life Insurance Company will pay $8 million to settle charges filed by the SEC alleging that the insurance giant consistently violated pricing rules when processing orders of many of its insurance products. A statement by the SEC claims that Nationwide knowingly waited to deliver mail in order to avoid using current-day prices.
“For more than a 15-year period, Nationwide intentionally delayed the delivery of untracked mail containing orders from customers and processed them at the next day’s prices in violation of the law,” said Sharon Binger, director of the SEC’s Philadelphia regional office.
According to a report by the Wall Street Journal, Nationwide requested that the post office separate mail directed to its variable contract business from mail directed to boxes for other lines of business. The company also asked the mail delivery service to travel to the post office at 3 A.M., 5 A.M., and 7 A.M. each business day to retrieve mail for other lines of business. The post office was asked not to collect variable contract mail at those times, however.
If contracts arrived in Nationwide’s parking lot before 4 P.M., the company allegedly told delivery people to wait until 4:01 P.M. to enter the building. According to the SEC, this led “some couriers to intentionally delay their arrival time at Nationwide by stopping to purchase meals or fuel.”
By doing this, Nationwide was able to charge higher prices for mutual fund shares, as rules require an investment company to compute the value of its shares at least once daily at a specific time determined by the board of directors.
Nationwide spokesman Ryan Ankrom told the Journal that “there were no allegations that Nationwide benefited from its PO box mail processing practices or the process benefited certain groups of investors over others.” He also stated that Nationwide chose to settle in order to focus on the needs of its members.
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