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Nov 30 2012

DOL Fines Defined Benefit Plan Advisor $1.27 Million for Failing to Disclose Fees

On August 23, 2012, the Department of Labor (“DOL”) issued a news release announcing that USI Advisors, a Glastonbury, Connecticut based fiduciary investment advisor, had agreed to pay $1.27 million to 13 pension plans to resolve alleged violations of ERISA stemming from the company’s failure to fully disclose its receipt of 12b-1 fees from the mutual funds in which the pension plans’ assets were invested. In addition to failing to disclose the receipt of such fees, USI also failed to use those fees for the benefit of the plans by either directly crediting the amounts to the plans or offsetting other fees that the plans paid to the company. Under ERISA, a fiduciary with respect to a plan cannot use its fiduciary authority to receive an additional fee or to receive compensation from third parties for its own personal account in transactions involving plan assets. This settlement underscores the importance of the DOL’s recently finalized fee disclosure regulations, which require fiduciaries like USI to be more transparent about the fees they receive while providing services to ERISA retirement plan clients.