Compliance March 10, 2009

Pension Consultant Provides Fee Restitution to Clients

The U.S. Department of Labor has reached a settlement agreement with Consulting Services Group (CSG) of Memphis, Tennessee, and its affiliated broker/dealer, which provides for fee restitution to plan clients.
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According to a DoL news release, CSG has already paid $277,802.78 and agreed to pay a $27,780 in civil penalty. After an investigation into alleged violations of the Employee Retirement Income Security Act (ERISA) by CSG, David Meals, the firm’s former chief compliance officer, and affiliated Trading Services Group Inc., the Atlanta Regional Office of the department’s Employee Benefits Security Administration (EBSA) alleged the defendants received undisclosed and unauthorized compensation, and failed to timely provide promised commission rebates to certain ERISA plans from 2002 to 2006.

In addition to restitution, the settlement agreement requires full disclosure of compensation and potential conflicts of interest by CSG in all contracts with employee benefit plans governed by ERISA, the news release said. CSG must provide specific information describing all compensation received by CSG and its affiliates from any source, how the compensation is determined, and whether CSG or any affiliate acquired a financial interest in any transaction to be entered into with ERISA plans.

The firm also agreed to refrain from making misrepresentations in marketing materials, and Meals agreed to refrain from serving as a compliance officer or in a fiduciary capacity.

In addition, the settlement calls for procedures to ensure that recordkeeping by CSG for ERISA plans is accurate, and invoices provided to plans correctly reflect services provided and the total cost to the plans.

“Our settlement requires that plan fiduciaries receive full and accurate disclosure of all compensation received by their investment advisers so that the plans pay no more than reasonable compensation for their services. Those who provide investment advice to plans must act with undivided loyalty to the plan and its participants.” said Alan D. Lebowitz, EBSA’s deputy assistant secretary, in the release.

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Deals & People March 9, 2009

UBS Grabs Schoff Team from Smith Barney

For the second time in about two weeks, UBS said it has lured away a Smith Barney advisory group.
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UBS said Monday it had named William L. Schoff, a 24-year financial services veteran, as a managing director. In the latest move, UBS will support corporate clients and provide wealth management and education to employees involved in company stock plans.

The Schoff Group’s 10 team members, including five financial advisers who also provide wealth management and corporate services, join him in the move from Citigroup, where Schoff was a managing director and a senior adviser in the Citi Family Office, according to a UBS announcement.

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Citigroup and Morgan Stanley agreed in January to form a joint venture and make the largest brokerage in the world with 20,000 financial advisers and $1.7 trillion in client assets (see “Morgan Stanley Smith Barney Is Born’).

“I am excited about joining UBS, which I have respected as a competitor for years,” Schoff said, in the announcement. “UBS has a strong balance sheet, a sophisticated wealth management offering for affluent clients, and a robust platform for corporate clients. It is the only firm in the marketplace that delivers in all three areas.”

The announcement said the Schoff Group’s service includes an education program for executives and employees covering financial planning, retirement planning, stock options and more.

UBS announced in late February that it had named Smith Barney veteran Robert J. Callanan, Jr. as a managing director.

Joining the firm with Callanan was a team of six members who specialize in executive and management equity compensation plans that provide awards to senior corporate managers (see “Callanan to Lead UBS Equity Compensation Group’).

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