The Attorney General's Insurance & Financial Services Division aggressively represents consumers, cities, towns and the state in civil matters involving the insurance, securities and lending industries. The Division performs key consumer protection functions, including securities enforcement, insurance and lending enforcement, insurance rate cases and advocacy, and consumer mediation and advocacy.
The Division is tasked with investigating unfair or deceptive practices relating to investments and securities. The Attorney General also has specific powers under the Massachusetts False Claims Act to bring actions against securities professionals who mislead or defraud municipalities or state government entities. Case highlights include:
- Subprime Mortgage Securitization: The Division publicly announced in 2009 its industry-wide review of investment bank mortgage securitization practices. In this review, the Division is investigating the role of investment banks and investment banking arms of major commercial lending institutions in facilitating and securitizing subprime and related residential mortgage loans. This includes the facilitation of the sale of unfair mortgages to consumers, the use of deception in the sale of securitization notes, the issuance of false statements to Massachusetts governmental securitization investors relating to underlying pool assets and performance, and whether the financial institutions caused false claims to be submitted to governmental entities. The investigation has generated groundbreaking results, as reflected in our first-in-the-nation settlement with Goldman Sachs, and the Assurances of Discontinuance filed in Suffolk Superior Court regarding Morgan Stanley, and RBS. In total, these cases resulted in the payment of over $210 million to homeowners, investors and the state. The investigation continues into the remainder of the industry. IFSD has provided comments to the SEC seeking to improve the regulatory structure for securitization ( here file size 3MB and here file size 1MB ).
- Auction Rate Securities: In 2008, the Division brought the nation’s first enforcement actions regarding auction rate securities and recovered $76.8 million from Merrill Lynch, UBS, Morgan Stanley and Citibank for selling inappropriate auction rate securities to cities, towns and state agencies.
- Deceptive Bond Fund Sales: In 2010, IFSD conducted an investigation of State Street Bank with the SEC regarding State Street’s role in misleading bond fund investors. IFSD and the SEC obtained $300 million in restitution from State Street for investors nationwide, and a $10 million penalty for the Commonwealth.
The Division brings consumer protection actions relating to unfair and deceptive practices in the insurance and lending industries. Case highlights include an industry-wide investigation into motorcycle insurance rating practices which forced fifteen auto insurance companies to refund nearly $40 million to tens of thousands of motorcycle owners, as well as actions against payday lenders, student lending and financial aid advisory services, credit unemployment insurance providers, and double-dipping insurance agencies.
IFSD is also the public’s advocate in insurance rate proceedings held before the Commissioner of Insurance. Over the past four years, IFSD’s work on rate cases has saved consumers approximately $400 million.
IFSD offers a hotline and a mediation program to assist consumers in disputes relating to insurance and investment products. IFSD’s mediation program handles nearly 3000 consumer calls and completes more than 600 mediations each year.