DOL Accuses Firm of Prohibited Retirement Plan Loans

The suit alleges a law firm president and owner caused the company’s retirement plan to loan thousands of dollars to real estate deals he controlled.

The Department of Labor (DOL) has filed suit to recover more than $110,000 for the retirement plan of The Leiter Group Attorneys and Counselors Professional Corp.

According to the DOL, an investigation by its Employee Benefits Security Administration (EBSA) found Peoria, Illinois-based law firm The Leiter Group Attorneys and Counselors Professional Corp. and Thomas E. Leiter, the firm’s president and sole owner, violated multiple provisions of the Employee Retirement Income Security Act (ERISA). Specifically, the suit alleges that Leiter caused the company’s retirement plan to loan more than $179,000 to building trusts controlled by Leiter and that he caused the plan to invest $225,000 in a Florida condominium project substantially controlled by Leiter.

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The suit seeks a court order requiring The Leiter Group Attorneys and Counselors Professional Corp. and Leiter to restore all losses to the plan’s participants and to appoint an independent fiduciary to administer the plan.

As of December 31, 2014, the plan had 10 participants and $435,767 in assets.

The complaint, filed in the U.S. District Court for the Central District of Illinois, can be viewed here.

Guide to Delegated Investment Management Issued

Willis Towers Watson says delegation, i.e. turning over certain functions to a third party, isn’t a simple outsourcing solution.

Willis Towers Watson has issued “A guide to delegated investment management.”

The guide answers the question “What is delegated management?” and discusses roles and responsibilities as well as required skills of all parties.

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In addition, the guide addresses:

  • Setting objectives;
  • Implementation;
  • Conflicts of interest;
  • Monitoring; and
  • Fees.

The firm says delegated investment management can close the gaps between the need for efficient investment strategies, real-time decision-making and the typically constrained governance budget of a pension fund committee.

It explains that delegation turns over certain functions to a third party, but it isn’t a simple outsourcing solution. Rather, it should complement the strategic responsibilities of the plan sponsor. The model is the same as when a management team acts upon a corporate board’s strategy. The plan sponsor remains in control of high-level strategy, defining the pension plan’s long-term funding objectives and return requirements relative to the liabilities, while the delegated investment manager implements the daily aspects of that strategy, including portfolio construction and operations.

The firm suggests delegated investment management can materially benefit pension plans looking to add to their investment decision-making capabilities. The industry has developed considerably over recent years, presenting pension plans with a variety of credible propositions from competing providers. As with many other professional service selections, details are important, and there are no real shortcuts.

Willis Towers Watson can be contacted at investment@willistowerswatson.com to discuss any of the concepts in the guide in greater detail.

The guide can be downloaded from here.

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