A Connecticut-based fiduciary investment adviser agreed in a settlement to pay about $1.3 million to 13 pension plans to resolve alleged ERISA violations related to mutual fund fees the firm received.
USI Advisors Inc. made investments in mutual funds on behalf of ERISA-covered defined benefit plan clients and received 12b-1 fees from those funds, according to a U.S. Department of Labor investigation. The firm failed to fully disclose the receipt of the 12b-1 fees, which are paid by a mutual fund out of fund assets to cover certain expenses. USI Advisors also failed 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 it, DOL’s Employee Benefits Security Administration said in an Aug. 23 announcement about the settlement.
Under the settlement terms, USI Advisors 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.
For additional information about retirement investment, see Thompson’s employee benefits library including the 401(k) Handbook.