SEC Settles Charges Against GWFS Equities for $1.5 Million

The Great-West Life affiliate was accused of violating the federal securities laws governing the filing of Suspicious Activity Reports.


The Securities and Exchange Commission (SEC) announced it has settled charges against GWFS Equities, a Colorado-based registered broker/dealer (B/D) and affiliate of Great-West Life & Annuity Insurance Co., for allegedly violating the federal securities laws governing the filing of Suspicious Activity Reports (SARs). GWFS provides services to employer-sponsored retirement plans.

The SEC says that between September 2015 and October 2018, GWFS was aware of increasing attempts by external bad actors to gain access to the retirement accounts of individual plan participants. The agency further says GWFS was aware that the bad actors attempted or gained access by, among other things, using improperly obtained personal identifying information of the plan participants, and that the bad actors frequently were in possession of electronic login information such as usernames, email addresses and passwords.

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B/Ds are required to file SARs for certain transactions suspected to involve fraudulent activity or a lack of an apparent business purpose. The guidance for preparing SARs from the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) states that in order to be effective tools for law enforcement and fulfill their intended purpose, SAR narratives should include “the five essential elements of information—who? what? when? where? and why?—of the suspicious activity being reported.”

The order finds that GWFS failed to file approximately 130 SARs, including in cases in which it had detected bad actors gaining, or attempting to gain, access to the retirement accounts of participants in the employer-sponsored retirement plans it serviced.

Further, for nearly 300 SARs that GWFS did file, the order finds GWFS did not include the “five essential elements” of information it knew and was required to report about the suspicious activity and suspicious actors, including cyber-related data such as URL addresses and internet provider (IP) addresses.

“Across the financial services industry, we have seen a large increase in attempts by outside bad actors to gain unauthorized access to client accounts,” says Kurt Gottschall, director of the SEC’s Denver regional office. “By failing to file SARs and by omitting information it knew about the suspicious activity it did report, GWFS deprived law enforcement of critical information relating to the threat that outside bad actors pose to retirees’ accounts—particularly when the unauthorized account access has been cyber-enabled.”

The SEC’s order notes that GWFS’ significant cooperation with its investigation and subsequent remedial efforts were taken into account in the determination to accept the company’s settlement offer.

The remedial efforts included adding dedicated anti-money laundering (AML) staff and systems, replacing key personnel, clarifying delegation of responsibility for filing SARs and implementing new SAR-related policies, procedures, standards and training.

The SEC’s order finds that GWFS violated Section 17(a) of the Securities Exchange Act and Rule 17a-8 thereunder.

Without admitting or denying the SEC’s findings, GWFS agreed to a settlement that imposes a $1.5 million penalty, a censure, and an order to cease and desist from future violations.

In mid-April, the U.S. Department of Labor (DOL) released new guidance for plan sponsors, plan fiduciaries, recordkeepers and plan participants on best practices for maintaining cybersecurity, including tips on how to protect the retirement benefits of America’s workers. It was the first time the DOL’s Employee Benefits Security Administration (EBSA) issued cybersecurity guidance.

Retirement Industry People Moves

OneDigital Investment Advisors acquires Clearview Advisory; FPS Group expands executive team; Principal adds portfolio manager to Global Asset Allocation team; and more.

Art by Subin Yang

Art by Subin Yang

OneDigital Investment Advisors Acquires Clearview Advisory

OneDigital Investment Advisors has acquired its second Atlanta-based office this year, Clearview Advisory.

Clearview Advisory offers plan consultation services such as retirement plan governance, cost management, investments, participant outcome optimization and employee engagement assistance. Additional services include mergers and acquisition (M&A) support, health savings account (HSA) education for employees and recordkeeper conversion support.

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Gregory Fiore, managing partner of Clearview Advisory, comments, “Like OneDigital, we recognize that our clients want a more seamless approach to benefits where the retirement plan works in tandem with all of the other benefits employers offer. We see this as an opportunity to align with another leader in the industry and create a better product for customers.”

Jennifer Pearson, vice president of Clearview Advisory, adds, “Our team is excited about working with OneDigital and expanding what we’re able to do for clients. We look forward to joining an organization whose mission and vision are similar to ours so that we can continue to make saving and investing easier for everyone.”

FPS Group Expands Executive Team

FPS Group has added Lee Tenney as head of sales and distribution and Warren Hadley as chief financial officer (CFO).

Tenney is a retirement industry veteran, having spent more than 20 years in various positions with Allianz Global Investors and CUNA Mutual Group. His focus at FPS is to continue building successful client and partner relationships while leading all sales and distribution efforts.

Hadley brings more than 25 years of experience to his new role of chief financial officer. He will lead the finance, human resources (HR) and legal teams at FPS Group. Previously, Hadley was CFO at Innovest and Wealth Management Systems (WMSI).

Principal Adds Portfolio Manager to Global Asset Allocation Team

Principal Financial Group has announced that May Tong will join Principal Global Asset Allocation (PGAA), the specialized global asset allocation investment team of Principal Global Investors, as a portfolio manager.

Tong will join portfolio managers Jessica Bush, Marc Dummer, Kelly Grossman and Ben Rotenberg in managing the firm’s $10 billion outcome-oriented solutions, including the following flagship solutions: Global Diversified Income strategy, Diversified Real Asset strategy and the Diversified Select Real Asset Strategy. The processes and strategies will remain unchanged. The investment team will collectively contribute to the direction of portfolios and will be further supported by the specialized multi-asset research areas within Principal Global Asset Allocation.

May comes to PGAA with close to 20 years of portfolio management experience, solving for a variety of client outcomes including retirement income, target-date, target-risk and 529 plans, most recently for Franklin Templeton’s Investment Solutions group. Prior to her work at Franklin Templeton, she was a portfolio manager and head of the portfolio implementation and management team at Voya Investment Management. May received her MBA from Columbia Business School. May has earned the Chartered Financial Analyst (CFA) designation.

Wagner Law Group Adds Partner Who Specializes in Multiemployer Plans

The Wagner Law Group has announced that attorney Neelam Chandna has joined the firm as a partner.

“Neelam’s unique and in-depth ERISA [Employee Retirement Income Security Act] and employee benefits experience, especially in the area of multiemployer plans, will serve as a tremendous asset to our already robust practice in that area of the law,” the company said.

Chandna advises collectively bargained multiemployer funds, known as “Taft-Hartley plans,” including defined benefit (DB), defined contribution (DC), health and welfare, and apprenticeship plans. She also advises public sector health and welfare funds and single-employer plans and will support the firm’s large practice of retiree medical trust and voluntary employees’ beneficiary association (VEBA) clients in the public sector.

Chandna’s experience in employee benefits includes plan design, plan drafting and consultation in a broad range of matters under ERISA and the Internal Revenue Code (IRC). She has represented trust funds in a wide variety of sectors, including construction, manufacturing, distribution, transportation, entertainment and law enforcement.

Chandna was previously a partner at a Los Angeles law firm and worked for the Employee Benefits Security Administration (EBSA) sector of the Department of Labor (DOL), where she dealt with ERISA issues involving both single-employer and multiemployer plans. She is a graduate of Northeastern University School of Law in Boston, and the University of California, Berkeley.

Voya Purchases HSA TPA

Voya Financial Inc. has entered into an agreement to purchase Benefit Strategies LLC, a third-party administrator (TPA) of health savings and spending accounts.

Benefit Strategies provides administrative services for COBRA [Consolidated Omnibus Budget Reconciliation Act], direct billing, flexible spending accounts (FSAs), health savings accounts (HSAs), health reimbursement arrangements (HRAs) and other services to more than 3,400 employers and nearly 370,000 participant accounts throughout the U.S. Terms of the transaction were not disclosed.

“We are very excited about this transaction as it supports Voya’s workplace growth strategy and will accelerate our expansion in the health savings and spending accounts market,” says Rob Grubka, CEO of health solutions for Voya Financial. “In addition to complementing Voya’s current health and wealth solutions, Benefit Strategies will deepen our capabilities to serve new and existing health savings and spending account clients through its enhanced call center support, implementation management and ongoing client services. Equally important, we see a great cultural fit between the Benefit Strategies team and Voya as both of our organizations are specifically focused on helping individuals take advantage of the many benefits of workplace-based savings accounts.”

The transaction is expected to close in the third quarter of 2021 and is subject to customary closing conditions. Approximately 150 Benefit Strategies employees will join Voya after the transaction closes.

Vanguard to Open New Office in Dallas

Vanguard announced plans to open a new office in the Dallas-Fort Worth region in early 2022.

In alignment with the firm’s commitment to making advice more accessible and affordable for investors, the new location will be dedicated to supporting all aspects of its growing advice businesses. To start, the new hub will be staffed by financial advisers aligned to the firm’s virtual advice offer, Personal Advisor Services, as well as IT professionals supporting Vanguard’s broader advice services.

“Our advice offers are powered by sophisticated technology, personalized to meet each clients’ individual needs and preferences, and accessible at an industry-leading low all-in cost. Establishing a new office in Dallas reflects our continued commitment to hiring top adviser and technology talent to support our advised clients,” says Vanguard CEO Tim Buckley.

Newly hired crew will work remotely until the new office opens in early 2022. Consistent with the existing virtual service model, advisers in the Dallas office will engage with clients via phone, email and videoconference.

The Dallas office will be Vanguard’s fifth U.S. location. The firm was founded in Valley Forge, Pennsylvania, in 1975 and has additional offices in Scottsdale, Arizona (1994); Charlotte, North Carolina (1997); and Washington, D.C. (2007). Specifics on location, hiring plans, and staffing for the new office will be confirmed in the coming months.

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