MassMutual Reviews Direction as Ouster of Previous CEO Draws Scrutiny

June 19, 2005

MassMutual Financial Group said it is forming an “Office of the CEO” to bring together executives who will review the insurance firm’s direction and operations.

The announcement came two weeks after Robert O’Connell, MassMutual’s chief executive, president and chairman, was fired because of alleged misconduct.

The company’s new CEO, Stuart H. Reese, said the office will bring together executives from different parts of Springfield-based MassMutual to focus on company strategy, operations and growth.

O’Connell spent nearly seven years before he was removed by the company’s board, and other top officials have left MassMutual since O’Connell’s ouster. The company has released few details about O’Connell’s firing other than to say it involved misconduct.

However, media reports citing people familiar with the matter have cited allegations that O’Connell used unauthorized trading techniques to boost the value of a supplemental retirement fund; bought a company-owned condominium in Florida at a below-market price; and interfered in disciplinary efforts aimed at his son and son-in-law.

A spokesman for O’Connell has said O’Connell denies wrongdoing and intends to challenge the board’s conclusions.

Massachusetts’ secretary of state, attorney general and insurance commissioner are looking into aspects of O’Connell’s ouster.

With $23.2 billion in revenue last year and 27,000 employees, the 154-year-old company sells life insurance and pension products to individuals and businesses through its own offices as well as third parties. It is owned by policyholders.

The company is refusing to cooperate with the secretary of state, who has requested documents related to the termination of O’Connell.

Secretary of State William F. Galvin is looking into his legal options, which could include asking a judge to intervene, a spokesman said.

MassMutual issued a statement saying that Galvin’s demand for “a large volume of documents on less than 24 hours’ notice is unreasonable.”

The company also questioned Galvin’s “doubtful jurisdiction,” according to a letter from a company attorney to Galvin’s securities division. Galvin claims oversight of mutual funds companies such as MassMutual subsidiary OppenheimerFunds.

Galvin on June 13 requested the documents, including O’Connell’s termination letter and a 59-page report that led MassMutual’s board of directors to decide to oust him.

When the documents were not delivered by 5 p.m. on June 15, Galvin issued the subpoena, which expired June 16 at 5 p.m.

The company has voluntarily briefed Insurance Commissioner Julianne Bowler and Attorney General Tom Reilly on the circumstances surrounding O’Connell’s ouster and gave those officials the documents, a MassMutual spokesman said.

“We do not object to you obtaining the copies of the material we have already provided, or any materials we subsequently provide, to the attorney general,” MassMutual’s lawyer wrote to Galvin.

Attorney General Reilly is conducting a criminal investigation, according to the letter from MassMutual’s lawyer to Galvin.

The board fired O’Connell earlier this month after nearly seven years on the job. The company has released few details about O’Connell’s firing other than to say it involved misconduct.

Copyright 2005 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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