GLOBAL – Mercer Investment Consulting and global advisory company Wilshire Associates have confirmed they were recently subpoenaed to provide information to the US Department of Labor’s investigation of pension consultants.

The DOL probe into possible violations of fiduciary responsibilities under the Employee Retirement Income Security Act follows an investigation last year by the Securities and Exchange Commission, which looked into possible conflicts of interests.

While the DOL did not respond to requests for comment from IPE, reports stated that the DOL’s Employee Benefits Security Administration (EBSA) requested the ‘examination’ of 13 pension consultants thought to have conflicts of interests according to the SEC report issued last May.

In a statement to IPE, Mercer said: “In January 2006, Mercer Investment Consulting received a subpoena from the US Department of Labour requesting information related to our business.”

According to the spokesperson, Mercer “promptly” provided the DOL with an overview of its business model and activities, and is fully cooperating with the department’s examination.

“The DOL has given us no indication that this information request is anything other than part of its routine regulatory oversight of our business as a provider of services to pension plans subject to the Employee Retirement Income Security Act, and we have no reason to believe otherwise.”

According to a Wilshire statement, the broad list of documents requested by the DOL were largely similar to those requested by the SEC in 2003.

It said: "It is our understanding that much like the SEC matter, the DOL action is broad-based and not specific to Wilshire.

"As we did with the SEC, we are cooperating fully with the Department of Labor which has informed us that, 'This inquiry should not be construed as an indication that any violations of law have occurred or as a reflection upon any person involved in this matter’."

In February, IPE reported that EBSA enforcement officials were reviewing SEC documents to determine what DOL investigative action might be necessary.

It was also reviewing existing DOL regulations relating to the disclosure of fees, including revenue sharing arrangements, by service providers to employee benefit plans, said DOL assistant secretary Ann Combs in a letter to senators.

EBSA works to safeguard the economic interest of more than 150m people in roughly 6m employee benefit plans with assets in excess of $4.4tn (€3.5tn).

In other news, the Connecticut-based Hartford Financial Services Group has agreed to a $20m settlement payment following claims it paid off brokers to recommend its annuities to pension schemes, according to a Reuters report.

The settlement – negotiated by New York attorney general Eliot Spitzer and Connecticut attorney general Richard Blumenthal – will see $16.1m go to plan sponsors who bought annuities between 1998 and 2004.

A further $3.9m will be equally divided between the states of New York and Connecticut, said a Hartford release.

"We have apologized to plan sponsors for not having provided full disclosure of the compensation paid," said Hartford chairman and chief executive Ramani Ayer in a statement.

“Resolving this matter was important for our company. We have cooperated fully with regulators during their investigations and will continue to do so."

Topics