A four-year legal saga, which pitted hundreds of thousands of older Americans against an insurance giant from Golden Valley, has come to a quiet -- and seemingly contradictory -- end.
A federal jury ruled late Monday that Allianz Life Insurance Company of North America used deceptive practices in selling a certain type of investment product known as an equity-indexed annuity, which is linked to the stock market.
But in a surprising twist, the 11-person jury awarded no damages to the estimated 340,000 people nationwide who bought the annuities earlier this decade, noting that no one was directly harmed from the deceptive sales practices.
The verdict culminates a prolonged legal battle between Allianz Life and consumers who claimed the company enticed them into buying annuities with false promises of bonuses that never materialized.
For years, the case cast a dark cloud over Allianz Life and other major insurance companies that sell these annuities. The companies were forced to defend their reputations -- and pay out millions -- as an onslaught of attorneys and state regulators said they were glossing over the complex nature of the products and locking older people into contracts from which they may not live long enough to fully benefit. Minnesota Attorney General Lori Swanson was among those who went after the company for sale of the products.
Now, the verdict puts an end to the legal squabbling but raises new questions about the lengths to which companies can go in marketing sophisticated financial products. In this case, the jury appeared to agree with one of Allianz Life's arguments during the three-week trial: People who bought the annuities fared better than if they had put their money in the moribund stock market.
The implication, some legal experts argued, is that financial companies can deceive customers but not be penalized if the products themselves do not hurt people's pocketbooks.
"Does this mean a company can be dishonest and, because of an external event, get off scot-free?" Akshay Rao, a marketing professor at the University of Minnesota's Carlson School of Management, who testified on behalf of the plaintiffs, said in an interview Tuesday. "Had the [stock] market not tanked, would Allianz have been culpable?"