Compliance April 10, 2009

Doctor Liable for Investment Manager 401(k) Plan Theft

A Fairfield, Connecticut, podiatrist has been ordered to restore assets to his firm’s 401(k) plan that were stolen by an investment management firm and to pay a civil penalty to the Department of Labor (DoL).

Reported by

Rebecca Moore

The Norwalk Advocate reports that the DoL filed a lawsuit last September alleging that Anthony Iorio, owner of Fairfield Podiatry Associates, failed to fulfill his fiduciary responsibilities with respect to the plan from September 2004 to February 2007 by not adequately monitoring the investment manager’s activities and not securing a bond to protect the plan’s assets, as required by the Employee Retirement Income Security Act (ERISA). Lafferty & Partners LLC, a Red Bank, New Jersey-based investment and financial management services firm hired by Iorio to oversee the plan’s assets, and its owner, Jeffrey Lafferty, stole thousands of dollars from the plan’s fund, the suit says, according to the news report.

A consent order requires Iorio to restore to the plan $32,263.51 and to pay a $6,452.70 civil penalty. Iorio must ensure that the repayment amount, which represents principal and interest, is properly allocated to participants’ accounts and provide proof of payment to the DoL, the news report said.

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Lafferty and Vincella Ross, co-founders of Lafferty & Partners, which specialized in offering financial services to podiatrists, were arrested in September 2007 for first-degree money laundering and conspiracy to commit money laundering. New Jersey’s Attorney General alleged they stole a total of more than $500,000 from clients, including Iorio.

“Employers who sponsor employee benefit plans are responsible for keeping close watch over how the funds in those plans are administered,” said Jean Ackerman, regional director of the Labor Department’s Employee Benefits Security Administration in Boston, in the news report.

Data & Research April 10, 2009

Most Still Prefer Capitalism, but …

According to a new survey, more than half of Americans think capitalism is better than socialism.

Reported by

Nevin E. Adams

However, the latest Rasmussen Reports national telephone survey found that one-in-five respondents prefer socialism, while 27% are not sure. Of course, the question posed by Rasmussen Reports did not define either capitalism or socialism, so the results should perhaps be taken with a grain of salt.

Still, accepting the results at face value, by age cohort, adults under 30 are essentially evenly divided:

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37% prefer capitalism
33% socialism
30% are undecided.

According to the report, thirty-somethings are a bit more supportive of the free-enterprise approach, with 49% for capitalism and 26% for socialism. Adults older than 40 strongly favor capitalism, and just 13% of those older Americans believe socialism is better.

Money Makings

For those with money in the market, investors by a 5-to-1 margin choose capitalism, while even among those who do not invest, 40% say capitalism is better, compared to 25% who say they prefer socialism.

By a whopping 11-to-1 margin, Republicans favor capitalism, while Democrats are much more closely divided: 39% said capitalism is better, while 30% prefer socialism. As for those not affiliated with either major political party, 48% said capitalism is best, and 21% opt for socialism.

Free-Market Versus Capitalism

The report’s authors drew an interesting comparison of the new survey to an earlier survey in which 70% of Americans prefer a free-market economy. “The fact that a ‘free-market economy’ attracts substantially more support than ‘capitalism’ might suggest some skepticism about whether capitalism in the United States today relies on free markets,” the authors said.

Other survey data supported that notion, according to the report, which noted that rather than seeing large corporations as committed to free markets, two-out-of-three Americans believe that big government and big business often work together in ways that hurt consumers and investors.

Fifteen percent (15%) of Americans said they prefer a government-managed economy, similar to the 20% support for socialism. Just 14% believe the federal government would do a better job running auto companies, and even fewer believe government would do a better job running financial firms.