Wednesday, June 15, 2005

Former MassMutual CEO Subject of State Criminal Investigation

The Wall Street Journal reports (here) that former MassMutual Financial Group CEO Robert O'Connell, fired by the company last week for "willful malfeasance" related to self-dealing and other alleged improprieties, is now the subject of a criminal investigation by Massachusetts Attorney General Thomas Reilly.  O'Connell denies that he acted improperly, but a criminal investigation will make it much more difficult for him to respond to the termination if he chooses to fight it.  As a mutual insurance company, MassMutual is subject to regulation by the states, and it is not a publicly traded company so the SEC does not have direct jurisdiction over it, although its Oppenheimer Funds unit and other investment adviser subsidiaries are subject to the federal securities laws.  As an insurance company, it is more likely the U.S. Attorney's Office will defer to the state prosecutors unless there are improprieties outside Massachusetts that might create jurisdictional or evidence-gathering problems for state investigators. (ph)

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