|
|
|
Release Date: 08/23/2001
Release
Number: 05
Contact Name: Sharon Morrissey
Phone
Number: 202.219.8921 |
|
|
|
Kansas City, Missouri - The U.S. Department of Labor
obtained a judgment on August 16 requiring the West Des Moines-based IADA
Services, Inc. to repay $291,667 it received in excessive fees as an investment
advisor to the Iowa Auto Dealers' Association's insurance trust. IADA Services
is a service provider and investment advisor to the insurance trust. |
|
The judgment resolves a lawsuit alleging a series
of violations of the Employee Retirement Income Security Act (ERISA), in which
IADA Services received excessive compensation from its relationship with the
insurance trust. The lawsuit alleged that from June 30, 1992 through June 30,
1994:
-
The trust paid IADA
Services 35 cents per participant per month for administering COBRA, exceeding
the direct expense for this service
-
The trust paid IADA Services a monthly fee of $1,200 for
administering the trust, exceeding the direct expenses incurred by IADA
Services for this service
-
The trust paid IADA Services a fee of 2 percent of gross
insurance premiums billed to members of the trust for providing legal advice,
investment counseling, COBRA notices, premium billing and collection services,
issuing participants benefit
summaries and enrolling new participants. The 2 percent fee exceeded the direct
expenses incurred by IADA Services for the services provided.
|
|
In addition, the lawsuit alleged that from June
30, 1992 until June 30, 1996, the trust paid IADA Services an annual investment
management fee amounting to 0.375 percent of the trust's total assets even
though neither IADA Services nor the IADA Services controller were registered
investment managers as defined by the Employee Retirement Income Security Act
(ERISA) and required by the Investment Advisers Act of 1940. |
|
The trust, established in 1948, is a voluntary
employee benefits association (VEBA) providing medical, disability and death
benefits to Iowa Automobile Dealers Association members and the members'
employees. As of June 30, 1996, there were 5,217 participants in the trust and
assets of $7,763,202. |
|
"This action reaffirms our commitment to protect
the hard-earned benefits promised by employers", said Gregory P. Egan, director
of the Kansas City Regional Office of the Pension and Welfare Benefits
Administration, which conducted the investigation. The consent order/judgment
was entered in the federal district court in Des Moines, Iowa. The lawsuit was
filed on August 16. Employers and workers may call the PWBA's Kansas City
office for help with any problems relating to private-sector pension and health
plans at 816.426.5131. |
|
(Chao v. IADA Services, Inc.
Civil Action
No. 4:01-CV-9049) |
|
U.S. Department of
Labor news releases are accessible on the Internet. The information in this
news release will be made available in alternate format upon request (large
print, Braille, audio tape or disc) from the Central Office for Assistive
Services and Technology. Please specify which news release when placing your
request. Call 202.693.7773 or TTY 202.693.7775. |
| |
|
