Compliance September 19, 2018

Federal Court Orders Prison Term after Benefit Plan Theft

A Maryland business owner will serve one year and one day of imprisonment and pay more than $350,000 in restitution for violations of the Employee Retirement Income Security Act.

Reported by

The U.S. District Court for the District of Maryland has sentenced a Maryland business owner to one year and one day of imprisonment, and ordered him to pay $354,175 in restitution for violations of the Employee Retirement Income Security Act (ERISA).

Nathan Williams pleaded guilty to one count of theft or embezzlement from his company’s employee benefit plan.

For more stories like this, sign up for the PLANADVISERdash daily newsletter.

The order comes after an investigation in which the U.S. Department of Labor’s Employee Benefits Security Administration (EBSA), working with the U.S. Department’s Office of the Inspector General (OIG), determined that, from January 2012 to September 2012, Williams failed to deposit employee contributions to the plan. According to the EBSA and OIG, Williams withheld these contributions from employees’ paychecks, but used some of these funds for corporate and personal expenses.

The order shows Williams was the sole owner and chief executive officer of NW Systems Inc., based in Largo, Maryland. The company was the sponsor of the employee benefit plan in question.

“The embezzlement of employee contributions to company retirement plans undermines the private pension system,” observes EBSA Regional Director Michael Schloss, in Philadelphia. “The U.S. Department of Labor will aggressively pursue those who misuse funds from employee benefit plans.”

The Markets September 19, 2018

Institutions Turn to ETFs for Bond Market Liquidity

Diminished liquidity in global bond markets is fueling demand for fixed income exchange-traded funds.

Reported by

Because global bond market liquidity has diminished, institutional investors are investing more in fixed income exchange-traded funds (ETFs), according to Greenwich Associates.

Challenges in trading, liquidity and security sourcing are particularly pronounced in Europe, where 78% of institutions say this is a problem. Sixty percent of all institutions say that over the past three years, it has become difficult to execute large bond trades. More than two-thirds of respondents to the survey say these challenges are impacting their investment management processes.

This is why 60% of institutions have increased their usage of bond ETFs, with this asset class now comprising an average of 18% of their portfolios.

“A majority of institutions around the world now consider bond ETFs as an alternative for fixed-income exposure and liquidity,” says Greenwich Associates Managing Director Andrew McCullum.

Institutions that are investing more in bond ETFs say they allow them to obtain narrow and broad fixed-income exposures in both high-level strategic functions and targeted, tactical allocations.

One-third of current ETF investors plan to increase their bond ETF allocations over the next 12 months. In this U.S., this is 30%, and in Europe, 19%.

“Based on those results and investors’ continued concerns about bond market liquidity, Greenwich Associates expects steady and, perhaps, even accelerating growth in bond ETF usage and investment among U.S. and European institutions for the next three to five years,” McCollum adds.

A previous report by Greenwich Associates suggests ETF trading practices on both the sell side and buy side are leading to suboptimal executions, limiting ETF use. In addition, Greenwich found 41% of institutional investors are using ETFs to maintain exposure to a liquid investment, and 29% are doing so to meet potential cash flow needs.

Want the latest retirement plan adviser news and insights? Sign up for PLANADVISER newsletters.

«