Deals & People November 8, 2007

McCarthy Moves Up at CitiStreet

Sandy McCarthy, CitiStreet president of Retirement Services, has been named president of the company, it was announced today.
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McCarthy will continue to lead Retirement Services, which includes defined contribution, defined benefit, and pension payroll services. She will now also serve as company president and a CitiStreet board member, according to a press release.

“Sandy has had a leading role in all areas of our business. She continues to demonstrate strong leadership skills and has consistently delivered solid results. Her ability to develop and foster a team focused on our business and matched to our customers needs has been of significant value,” said Phil Lussier, CitiStreet chairman and CEO.

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McCarthy replaces Jim Murphy, who announced he will be leaving at the end of the year to pursue other opportunities. Murphy had been in charge of the Health and HR Services unit in Jacksonville, Florida, which consists of health and welfare administration and HR services, including advocacy and COBRA direct bill. That unit will now report to Lussier.

CitiStreet, which serves more than 11 million participants and administers more than $230 billion in assets in the United States for defined contribution, defined benefit and health and welfare plans of corporate, government, health care, Taft-Hartley and not-for-profit organizations, earlier this year had organized its services into two major business units: Retirement Services; Health and HR Services.

Lussier said those organizational changes were designed after a strategic review of how CitiStreet could best compete in the marketplace going forward.

“We created these business units to be aligned with meaningful marketplace trends in retirement and health services. It also allows us to build upon the success we have had in developing solutions for our customers,” said Lussier.

CitiStreet is a 50/50 joint venture between State Street Corp. and Citigroup. For more CitiStreet information, visit www.citistreetonline.com

Compliance November 8, 2007

401(k) Participant Accuses Wells Fargo of Self-Dealing

A participant in the Wells Fargo&Company 401(k) Plan has sued the financial services company and a number of its executives over allegations the plan improperly did million of dollars in plan business with Wells Fargo-affiliated entities.
Reported by

Plaintiff Yvonne Gipson of Annapolis, Maryland said the service deals for the 401(k) plan represented prohibited transactions under the Employee Retirement Income Security Act (ERISA). Gipson’s suit seeks class action certification on behalf of the nearly 165,000 401(k) participants.

“As a fiduciary for the 401(k) Plan, the Benefit Committee (and its members) was required by the Employee Retirement Income Security Act to act prudently and solely in the interest of the 401(k) Plan and its participants and beneficiaries when selecting investments, products, and services for the 401(k) Plan,” the suit charged. “It did not do so. Instead, it put Wells Fargo’s interests ahead of the 401(k) Plan’s interests by choosing investment products and pension plan services offered and managed by Wells Fargo subsidiaries and affiliates, which generated substantial revenues for Wells Fargo at great cost to the 401(k) Plan.”

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The suit charged that the Benefit Committee chose mutual funds offered, and advised by Wells Fargo Funds Management under the Wells Fargo Advantage Funds brand and trustee services provided by Wells Fargo Bank, N.A. Wells Fargo subsidiaries and affiliates, chiefly Wells Funds Management and Wells Bank, received tens of millions of dollars in annual fees from the 401(k) Plan, Gipson alleged.

“The Benefit Committee and its members knew or should have known by virtue of their senior positions at a large financial services company that comparable investment funds and retirement trustee services were available from unaffiliated entities,” the complaint alleged.

Citigroup was recently hit with a lawsuit leveling similar self-dealing allegations of conducting too much plan business with affiliated companies (See Citigroup Sued Over Possible ERISA Violations).

The Wells Fargo suit can be read here.

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