FL Sheriff Sues Nationwide Over Fees

A Florida Sheriff’s Department has sued Nationwide Life Insurance Co., over allegations Nationwide’s retirement plan fees unfairly allowed the company to make a profit through a revenue sharing arrangement.

The suit was filed by Orange County Sheriff Kevin Beary and charged that Nationwide, the agency’s former provider, would offer mutual funds to deputies and other investors only if the family of funds also paid the company a fee, according to an Orlando Sentinel news report.

That arrangement allowed Nationwide to pocket an exorbitant level of fees – money that rightly should belong to the investors, Beary’s attorney Roger Mandel told the newspaper.

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The lawsuit asks that Nationwide return to investors any profit made from charges to mutual-fund families since 1996, when the company is accused of beginning the practice.

According to the Sentinel, Sheriff Department officials became concerned within the past year after a consultant reviewing the department’s retirement plans advised the agency to ask Nationwide if it used revenue sharing.

The suit was filed in US District Court inColumbus,Ohio.

Schwab to Sell Wealth Management Subsidiary to BoA

Charles Schwab Corporation has announced an agreement to sell U.S. Trust, its wealth management subsidiary, to Bank of America for $3.3 billion in cash.

According to the announcement, following transaction close in the second quarter of 2007, the company estimates it will record a pre-tax gain on the sale of approximately $1.9 billion and after-tax proceeds totaling approximately $2.5 billion. Proceeds will be used for general corporate purposes, including share repurchases and continued investment in Schwab Investor Services, Schwab Institutional and Schwab Bank.


As of month-end September 2006, U.S. Trust had assets under management of $94 billion and total client assets of $159 billion, or 12% of Schwab’s $1.33 trillion in total client assets, the announcement said. Through the first nine months of 2006, U.S. Trust represented 17% of Schwab’s revenue and 10% of its pre-tax income.

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“[W]e have decided that the business and its clients will find even greater opportunity when combined with the platform and products available through Bank of America,” said Charles Schwab, Schwab Chairman and CEO, and Chairman of the U.S. Trust Board of Directors. “As for Schwab, this transaction will improve our overall profit margin and return on equity, and further sharpen our strategic focus on serving individual investors and independent investment advisers.”

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