Articles Tagged with ERISA

Stoltmann Law Offices is investigating cases where brokerage firms haven’t paid their representatives. In a new arbitration filing, 10 ex-Morgan Stanley brokers in the New York City area raised claims that the firm “improperly deferred” compensation in violation of the Employee Retirement Income Security Act of 1974 (ERISA) and also violated New York state law by withholding those funds when they left, according to Advisorhub.com.

“When claimants  (the brokers) – after many years of working for Morgan – decided to part ways with their employer, Morgan Stanley decided to deny them a substantial portion of the compensation that their brokers had earned for their dedicated work, and keep their hard-earned money to itself,” lawyers for the 10 brokers wrote in the complaint, which also tacks on a claim of violations of FINRA’s catch-all Rule 2010 requiring members act with “high standards.,”  advisorhub.com reported.

In 2020, several ex-Morgan advisors filed a class-action lawsuit against the company. The complaint “alleges that financial advisors may lose substantial amounts of their deferred compensation when they leave the company, and that this is not lawful because the deferred compensation plan (it alleges) is governed by the Employee Retirement Income Security Act of 1974 (ERISA).”

The Securities and Exchange Commission (SEC) announced yesterday that State Street Bank and Trust Company has agreed to pay $382.4 million in a global settlement for misleading mutual funds and other custody clients by applying hidden markups to foreign currency exchange trades. The SEC found that State Street realized substantial revenues by misleading custody clients about Indirect FX (foreign currency exchange trading), telling some clients that it guaranteed the most competitive rates available. State Street instead set prices largely driven by predetermined, uniform markups and made no effort to obtain the best possible prices for these clients. State Street agreed to pay $167.4 million in disgorgement and penalties to the SEC, a $155 million penalty to the Department of Justice and at least $60 million to ERISA plan clients in an agreement with the Department of Labor.

The SEC will issue its order instituting the settled administrative proceeding only after a federal court approves State Street’s proposed settlement with private plaintiffs in pending securities class action lawsuits concerning its price of foreign currency exchange trades. State Street agreed to admit certain findings in the SEC’s order. The SEC’s Division of Enforcement Director, Andrew J. Ceresney stated: “State Street misled custody clients about how it priced their trades and tucked its hidden markups into a corner where they were unlikely to notice. Financial institutions cannot mislead the customers about their trading costs.” State Street will be required to pay $75 million in disgorgement plus $17.4 million in interest to harmed clients as well as a $75 million penalty.

Fidelity Management Trust Co. has been accused of breaching its ERISA fiduciary duties for allegedly receiving unreasonable compensation through its brokerage window feature and a kickback scheme with an investment advice company. Fidelity allegedly selected mutual funds with higher expense ratios for the plan brokerage window that allowed the investment firm to rake in “significant amounts” in revenue-sharing payments in violation of the Employee Retirement Income Security Act. The lawsuit was filed in the U.S. District Court for the District of Massachusetts by participants in the Delta Air Lines Inc. retirement plan. As of 2014, the plan had approximately $7.5 billion in assets, of which more than $2.8 billion were invested through Fidelity’s brokerage window. The participants paid Fidelity enormous fees simply for obtaining access to mutual funds that were already established on Fidelity’s platform. It was also alleged that Fidelity earned unreasonable compensation by engaging in a kickback scheme with Financial Engines Advisors or to participants, according to the complaint.

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