EBSA News Release: [08/23/2012]
Contact Name: Mike Trupo or Jason Surbey
Phone Number: (202) 693-6588 or x4668
Release Number: 12-1753-BOS
USI Advisors of Glastonbury, Conn., agrees to pay $1.27 million to 13 defined benefit pension plans following US Labor Department investigation
BOSTON USI Advisors Inc. has agreed to pay $1,265,608.70 to 13 pension plans to resolve alleged violations of the Employee Retirement Income Security Act.
An investigation by the U.S. Department of Labor's Employee Benefits Security Administration found that the Glastonbury, Conn.-based fiduciary investment adviser made investments in mutual funds on behalf of ERISA-covered defined benefit plan clients and received 12b-1 fees from those funds. A 12b-1 fee is paid by a mutual fund out of fund assets to cover certain expenses. USI Advisors failed to fully disclose the receipt of the 12b-1 fees, and to use those fees for the benefit of the plans either by directly crediting the amounts to the plans or by offsetting other fees the plans would be obligated to pay the company.
"If you, as an investment adviser, are a fiduciary under ERISA with respect to plan investments in mutual funds, you cannot use your fiduciary authority to receive an additional fee or to receive compensation from third parties for your own personal account in transactions involving plan assets. We are very pleased that this settlement addresses the problems we identified with USI's practices and restores funds to the plans and their participants," said Phyllis C. Borzi, assistant secretary of labor for employee benefits security. "We are also very pleased that recently finalized fee disclosure regulations issued by the Labor Department will require fiduciaries like USI to be more transparent about the fees they receive when dealing with their plan clients."
Under the terms of the settlement, USI Advisors has agreed not to provide bundled investment advisory and actuarial services to any ERISA-covered defined benefit plan client without first entering into a written agreement, contract or letter of understanding that specifies the services provided and whether the company or its affiliates will act as a fiduciary to those plans. USI Advisors also will provide to clients a description of all compensation and fees received, in any form, from any source, involving any investment or transaction related to them.
The alleged violations in this case occurred between 2004 and 2010. USI Advisors is a wholly owned subsidiary of USI Consulting Group, a Goldman Sachs Capital Partners Co.
The investigation was conducted by EBSA's Boston Regional Office as part of the agency's Consultant/Adviser Project, which focuses on the receipt of improper or undisclosed compensation by employee benefit plan consultants and other investment advisers. The settlement was reached with the assistance of the Labor Department's Regional Office of the Solicitor in Boston.
Employers and workers can contact EBSA's Boston office at 617-565-9600 or toll-free at 866-444-3272 for help with problems relating to private sector retirement and health plans. For more information, visit http://www.dol.gov/ebsa/.