Lawsuits claim MetLife cheated policyholders in IPO
MetLife policyholders go to court
The following policyholders have filed suit against MetLife over the insurer's demutualization plan.
- John Brophy, Ralph Cobrinik, Ira Gelb, June Gelb, Vijay Shah, Gail Tamarin, and Lloyd Tamarin. Lawsuit filed in New York State Supreme Court in New York County on April 21 by Milberg Weiss Bershad Hynes & Lerach LLP of New York City.
- Darren Murray. Lawsuit filed in U.S. District Court in the Eastern District of New York on April 18 by Stamell & Schager LLP.
- Richard Schweinberg. Lawsuit filed in New York State Supreme Court in New York County on March 28 by attorney Louis F. Burke of New York City.
- Leo Schor. Lawsuit filed in New York State Supreme Court in New York County on March 28 by attorney Jonathan Kord Lagemann of New York City.
- Geneva, Leona, Richard, and Willard Meloy. Lawsuit filed in New York State Supreme Court in New York County on March 17 by Lovell & Stewart, LLP of New York City.
- Eugenia Fiala and Chris Waterson. Lawsuit filed in New York State Supreme Court in New York County on March 17 by Lovell & Stewart, LLP of New York City.
- Mark Smilow and Patrick Emanuel. Lawsuit filed in New York State Supreme Court in Kings County on January 14 by Weiss & Yourman of New York.
Seven lawsuits have been filed against Metropolitan Life Insurance Co. over its initial public offering (IPO), claiming the company failed to protect policyholders' interests in its quest to go public and did not provide them with adequate and correct information prior to the IPO.
Six lawsuits have been filed in New York State Supreme Court, and one has been filed in U.S. District Court in the Eastern District of New York. Five of the suits were filed prior to MetLife's April 5 IPO, while two suits were filed in the weeks after the insurer went public. Each of the lawsuits seeks class action status.
"We believe that we have strong defenses to these actions and we will vigorously contest the plaintiffs' claims," says John Calagna, a spokesperson for MetLife.
In the six suits filed in state court, Neil Levin, New York's superintendent of insurance, is a named defendant. Levin approved of MetLife's demutualization — the process of converting ownership from policyholders to stockholders — one day prior to the company's IPO. Terri Marchon, a spokesperson for Levin, declined to comment on the lawsuits.
Joseph Weiss of Weiss & Yourman of New York, who filed suit on Jan. 14 on behalf of policyholders Mark Smilow of Kings County, N.Y., and Patrick Emanuel of Georgia, says that while the attorneys are not all working together, it's likely that a number of suits will be merged into a single complaint. "We want to avoid duplication of effort," says Weiss.
Jared Stamell of Stamell & Schager LLP of New York, who filed suit April 18 on behalf of policyholder Darren Murray in U.S. District Court, says that while there is "no formal coordination" among the attorneys, many of them are keeping track of what others are doing in their respective cases.
MetLife's IPO raised $2.9 billion for the company. The company issued 493 million shares to policyholders, who had the option of taking stock, cash, or policy credits.
"Gross conflicts of interest"
The allegations in each suit are similar in nature. Each complaint alleges the stock MetLife offered to policyholders did not adequately compensate them for their ownership interests in the mutual company. The suits also allege that the information packages policyholders received about the demutualization plan contained misleading and unclear information.
Six of the seven suits filed in New York State Supreme Court allege Levin did not live up to his responsibility to assure that policyholders were treated "fairly" or "equitably" in the demutualization.
A suit filed April 21 by Milberg Weiss Bershad Hynes & Lerach LLP on behalf of seven policyholders claims MetLife's plan to convert to a publicly traded company was "infected with gross conflicts of interest" with MetLife's board of directors as well as Credit Suisse First of Boston, which underwrote the company's stock for the IPO.
The stock MetLife offered to policyholders did not adequately compensate them for their ownership interests in the mutual company.
The suit claims the company's value was "depressed" by Credit Suisse First in order to "assure vigorous interest by IPO investors." The complaint says the IPO price — which was $14.25 per share — represented only 75 of the company's value at the time of the IPO. That prompted policyholders who opted for cash instead of stock to get 25 percent less than what they deserved for their ownership rights, which turned out to be $400 million, according to the suit.
The suit also claims Levin abused his duties as insurance superintendent by approving the plan, which was "irreparably tainted by conflicts of interest" and approving the "grossly inadequate disclosures to policyholders in connection with their vote."
The suit filed by Weiss & Yourman claims MetLife issued a "false and misleading information booklet" to policyholders that contained information about the demutalization plan. This complaint alleges the booklet falsely informs policyholders that neither their demutualization vote nor the IPO itself will affect their coverage with the company. The suit contends the booklet failed to disclose the fact that the demutualization would "entrench" management, meaning that policyholders, who were once owners of the company, will no longer have owners' rights to the company.
Those eligible to join the class action suits are any policyholders who held a MetLife policy or annuity as of Sept. 28, 1999, the date MetLife's board of directors adopted the company's demutualization plan.