Compliance January 15, 2019

Empower ERISA Revenue-Sharing Lawsuit Voluntarily Dismissed

The court officially ended the case by approving a dismissal motion jointly filed by the parties.

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The U. S. District Court for the District of Colorado has dismissed an Employee Retirement Income Security Act (ERISA) lawsuit targeting Great-West, now doing business as Empower Retirement.

The decision notes that this outcome was reached voluntarily by the plaintiffs and defendants. Both parties agreed to dismiss this action pursuant to Federal Rule of Civil Procedure 41(a), with each party to bear its own attorneys’ fees, costs and other expenses of litigation.

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The underlying lawsuit alleged that Empower Retirement entered into revenue-sharing agreements and similar arrangements with various mutual funds (and other investment advisers, instruments or vehicles), leading it to receive revenue-sharing payments for its own benefit in violation of ERISA. Plaintiffs suggested in the lawsuit that the revenue-sharing represented “kickback payments” and that they were part of a “pay-to-play scheme” in which Empower received payments from mutual funds in the form of 12b-1 fees, administration fees, service fees, sub-transfer agent fees and/or similar fees in return for providing the mutual funds with access to its retirement plan customers.

While little detail is included in the text of the dismissal notice, Empower shared the following statement regarding the dismissal: “Yesterday the court officially ended the case by approving a dismissal motion jointly filed by the parties. Great-West paid nothing to the plaintiff or his attorneys to achieve this result. Rather, plaintiff chose to voluntarily dismiss the case. It’s important to point out that the lawsuit was NOT filed by a plan sponsor or an adviser. In this situation, a single investor who was a participant in one of our plans filed the lawsuit. Great-West believed the case was without merit and we are pleased with this result. Our products comply with the law and our fees are reasonable and consistent with the rest of the industry.  We believe our innovative offerings help our clients reach their retirement goals.”

The U.S. District Court for the Northern District of Illinois last year dismissed a similar lawsuit filed against Morningstar and Prudential.

Deals & People January 15, 2019

The Segal Group Acquires Benz Communications

Jennifer Benz, senior vice president, who was CEO of Benz Communications, said her firm has been experimenting with new things that The Segal Group’s current clients will have access to.

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The Segal Group has acquired Benz Communications, a human resources (HR) and employee benefits communications consulting firm.

The combined group is named Segal Benz (segalbenz.com) and will be led by Jennifer Benz, senior vice president, who was CEO of Benz Communications. The acquisition significantly expands The Segal Group’s communication consulting practice.

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“We’re really excited about joining Segal, to be able expand our team and expand the type of organizations that we work with,” Benz told PLANADVISER. She said Segal is a firm that very much shares Benz Communications’ values in terms of how to run a business and take care of their own employees, as well as how to do the right thing for clients so they can take the best care of their people. “Once we started talking to people, we thought there were so many synergies and shared values that would let us take things to the next level in terms of being able to support the organizations that we work with,” she said.

According to Benz, as her firm looked to the future, the question was, “How can we grow our impact even more and do more of the work our team loves and we think is so vital to the industry?” Partnering with Segal was the answer.

“And for Segal, they see communications as a huge part of the business across all of the practice areas—not just benefits but also other areas of HR where organizations are really having to do a lot—to compete very differently, to think about talent very differently and position them for success in the future. So they saw an investment in growing the communications group as a key part of serving their very broad group of clients now and in the future,” she added.

Asked what will improve as a result of the acquisition, Benz said it expands areas of service for both firms. For example, she said one thing Segal does very well that Benz Communications did not do is provide personalized communications. “They have a great group that does personalized statements for all areas of HR and benefits, and they also have great experts in other practices that we’ll be able to lean on, and have already started to.”

Benz added that her firm has been experimenting with new things, including interactive tools and different digital media, a chat box and augmented reality. The Segal Group’s current clients will have access to those things and be “able to always stay a couple of steps ahead.”

Benz is based in San Francisco. The Segal Benz leadership team will include New York-based Randolph B. Carter, senior vice president, who was the leader of Segal’s national communications practice, and San Francisco-based Isabelle Englund-Geiger, senior vice president, who co-led Benz Communications.

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