Morgan Stanley confirmed Thursday that it has been subpoenaed in Massachusetts as part of an investigation into the company's variable annuity sales.
A spokesman at the Wall Street investment bank confirmed that Massachusetts Secretary of the Commonwealth William Galvin had issued a subpoena for published accounts of the company's revenue-sharing agreements with variable annuity companies.
Variable annuities are a hybrid investment product with a life-insurance wrapper. They let investors put money in mutual funds, watch it grow tax-deferred, and later take it out as a lump sum or as a periodic stream of income for life. Such annuities have come under fire because of their high fees, complexity, and sometimes controversial sales practices.
Massachusetts filed a complaint against Morgan Stanley about a year and a half ago, seeking up to $8 million of commissions alleged to have been improperly charged. Mr. Galvin charged that the company's brokers had been paid bonuses to push Morgan Stanley mutual funds over those of competitors.
