For Immediate Release: April 16, 2012
Contact: Michael D'Aquino or Michael Wald
Release Number: 12-578-ATL (137)
Memphis, Tenn.-based Morgan Keegan agrees to pay more than $630,000
to benefit plans after US Department of Labor finds pension rule violations
Brokerage allegedly received incentives to steer clients to investments
MEMPHIS, Tenn. – Morgan Keegan and Co. Inc. has agreed to pay $633,715.46 to 10 pension plans covered by the Employee Retirement Income Security Act. This agreement follows an investigation by the U.S. Department of Labor’s Employee Benefits Security Administration that found the full-service brokerage company violated federal law when it recommended certain hedge funds of funds as investments to its ERISA-covered employee benefit plan clients. These recommendations resulted in the hedge funds of funds paying Morgan Keegan revenue-sharing and other fees.
Under the terms of the settlement, Morgan Keegan has agreed to disclose to its ERISA plans clients whether the company will act as a fiduciary to those plans. If the company is acting as a fiduciary, it will specify the services that it is providing as a fiduciary. Morgan Keegan also will provide to its ERISA plans clients a description of all compensation and fees received, in any form, from any source, involving any investment or transaction related to them. The company either will not collect commissions or, if it does collect them, refund to its ERISA plans clients 100 percent of the amount collected from third parties.
“The law is very clear: If you accept a fee to give investment advice to a retirement plan, you are a fiduciary and must therefore act solely in the best interests of the participants in that plan,” said Phyllis C. Borzi, assistant secretary of labor for employee benefits security. “Third-party payments should never be the motivating factor behind which investments brokers and advisers steer retirement clients into.”
The alleged violations occurred between April 2001 and November 2008. Morgan Keegan is based in Memphis and currently is owned by Regions Financial Corp. of Birmingham, Ala.
The investigation was conducted by EBSA’s Atlanta 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 Plan Benefits Security Division of the Office of the Solicitor. Employers and workers can contact EBSA’s Atlanta office at 404-302-3900 or toll-free at 866-444-3272 for help with problems relating to private sector retirement and health plans. For more information, visit www.dol.gov/ebsa.
U.S. Department of Labor news materials are accessible at www.dol.gov. The information above is available in large print, Braille, audio tape or disc from the COAST office upon request by calling 202-693-7828 or TTY 202-693-7755.