This week’s “Whistleblower Spotlight” shines on Bill Lloyd, a former agent with the insurance company MassMutual Financial Group based in Springfield, Massachusetts. Last month, Lloyd revealed himself as the unnamed whistleblower to whom the SEC awarded $400,000 for helping the agency uncover an allegedly fraudulent investment scheme at the company. It is only the thirteenth whistleblower award the SEC has made so far under the whistleblower provisions of the Dodd-Frank Act.
Lloyd, who had been working for MassMutual for more than two decades, discovered that certain annuities — into which thousands of customers had apparently poured billions of dollars of their retirement savings — did not work the way Lloyd and his fellow agents were told to describe them. Instead of a guaranteed income stream, Lloyd figured out that in reality the annuity would dry up within seven or eight years of the time investors began withdrawing money. He saw this having potentially devastating effects on his customers and felt compelled to do something about it.
So he reported up the company line to try to get MassMutual to fix the problem. According to the SEC, he did “everything feasible to correct the issue internally.” Initially, the company responded favorably to Lloyd’s outreach, but this early cooperation apparently ceased once the issue was brought to the government’s attention when someone stole Lloyd’s files on the subject and turned them over to the Financial Industry Regulatory Authority. It was only after MassMutual stopped working with him and the Regulatory Authority failed to act when Lloyd went to the SEC. In November 2012, MassMutual agreed to pay a $1.6 million fine and end the annuity cap that was misleading investors and so troubled Lloyd.
Lloyd could have kept his role in all this confidential. Whistleblowers under the Dodd-Frank Act are subject to strict confidentiality protections so their identity will never be disclosed. But Lloyd decided to speak openly about what he did — most prominently in recent interviews with the New York Times and Boston Business Journal — to encourage others to say something when they see something when the cause is just: “I have learned that sometimes you just have to stay the course because it is the right thing to do, and if you don’t do it nobody else is going to do it.”
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