2023-03-29 16:33:22 ET
A subsidiary of Citizens Financial Group ( NYSE: CFG ) is being investigated by Massachusetts securities regulators regarding the company's sales of a savings product offered by an insurer controlled by an indicted financier, according to a media report.
Earlier this week, the Wall Street Journal reported that tens of thousands of people had a total of $2.2B of funds frozen since 2019 due to the collapse of Greg Lindberg's insurance empire. Citizens Securities, which had representatives working in many Citizens Bank ( CFG ) branches, was a big seller of annuities from Colorado Bankers Life Insurance, the biggest of Lindberg's insurance operations.
In 2017 and 2018, the life insurance firm had increased sales of fixed annuities, which are similar to a bank certificate of deposit, soon after Lindberg had acquired the company, the article said, citing the insurer's regulatory filings.
On Wednesday, the WSJ said a spokeswoman for the Secretary of the Commonwealth William Galvin's office confirmed the probe. She said the investigation had started recenently and was focusing on individual Citizens Securities brokers.
She declined to comment to the newspaper on further details.
Last month Lindberg was indicted on federal fraud and conspiracy charges, which alleged he loaned $2B of his insurers' funds to companies in his private conglomerate, as he used large amounts to finance a lavish lifestyle, according to the WSJ . He has pleaded not guilty.
A Citizens Financial ( CFG ) spokesperson told WSJ , regarding the alleged wrondoing, "it is very unfortunate that our customers and others have suffered as a result of this situation and we are committed to doing what we can to help alleviate the impacts, including offering liquidity programs for customers who are experiencing hardship."
CFG shares slipped 0.2% in Wednesday after-hours trading.
Previously, CFRA sees Citizens Financial ( CFG ) and Fifth Third Bank ( FITB ) as oversol bank stocks that are set to rebound.
For further details see:
Citizens Financial unit being probed for product of Lindberg-related company - report