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Court orders trustees of International Association of Machinists’ national pension fund to restore $200K to plan, pay $40K in penalties
Date of Action: July 19, 2016
Type of Action: Consent judgment and order
Names of Defendants: “National Pension Plan,” also known as the International Association of Machinists’ National Pension Fund
Gary Allen, Thomas Connery, Philip Gruber, Warren Mart, Robert Martinez Jr.
Alfred Nelson, Robert Roach, Burton Trebour and Lynn Tucker
Allegations: An investigation by the U.S. Labor Department's Employee Benefits Security Administration found that the National Pension Fund defendants violated the Employee Retirement Income Security Act and breached their fiduciary duties by:
- Failing to select fund service providers loyally and prudently, including consultants and fund investment managers.
- Ignoring required procedures included in the fund’s governing plan documents regularly.
- Creating conflicts of interest for the fund.
- Unlawfully soliciting and accepting gratuities from plan service providers.
- Spending and permitting others to spend fund assets lavishly on unnecessary trips, parties and extravagant food, wine and accommodations.
Resolution: A settlement agreement ordered the defendants to repay $200,000 to the fund and pay $40,000 in civil money penalties. The order also requires the plan trustees to take the following actions to protect fund participants from future violations of the Employee Retirement Income Security Act:
- Within 30 days of entry of the order, adopt the new manager and consultant selection policy, which mandates that the plan trustees use a three-part search process for selecting an investment consultant or investment manager.
- Engage in a new search process for a new general investment consultant for the fund, and hire an independent search consultant to conduct a comprehensive and objective request for proposal process for this search.
- Amend the fund’s code of conduct and ethics to prohibit the same person from acting as both an investment consultant and investment manager for the fund.
- Amend the fund’s record retention policy to hold records relating to the hiring or firing of any investment consultant or manager for six years.
Court: U.S. District Court for the District of Columbia
Docket Number: 16-cv-120-RBW
Ed. Note: This version of the release includes a revised headline to clarify that the order related to the plan’s trustees, not the union in general.