Compliance October 23, 2015

Fiduciaries Ordered to Restore Withheld 401(k) Contributions

A construction company ceased operations in 2013 and has not paid 401(k) participants their plan assets, according to a lawsuit.
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The Department of Labor (DOL) announced that plan fiduciaries, including the owner of the plan sponsor company, have been ordered by a district court to restore employee contributions withheld but never forwarded to the plan.

In August, the DOL’s Employee Benefit Security Administration (EBSA) filed a lawsuit against Oxford Holdings, a former construction company, and its president and 401(k) plan trustee, Steven J. Watkins, alleging that plan contributions withheld from employee paychecks were kept by the company.

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Aetna Construction was also a participating employer in the plan. The lawsuit alleges that during the period from April 12, 2010, and April 5, 2013, contributions in the amounts of $139,144 and $117,167 were withheld from employee paychecks by each employer and not segregated from general company assets. The DOL says the plan assets were used for company purposes and obligations.

Oxford Holdings and Aetna Construction ceased operations in April 2013. The lawsuit says Watkins and the companies failed to terminate the plan and distribute assets to participants.

A consent judgment and order was entered in the U.S. District Court for the Southern District of Florida on October 19 which permanently enjoined the defendants from violating provisions of the Employee Retirement Income Security Act (ERISA) and from acting as fiduciaries, trustees, agents, or representatives in any capacity to any employee benefit plan, as defined by ERISA. Additionally, the defendants are ordered to make restitution to the plan, including interest or lost opportunity costs that occurred as a result of their breaches of fiduciary obligations through September 30. Post-judgment interest will continue to accrue until paid in full.

The defendants are also ordered to appoint AMI Benefit Plan Administrators Inc. as independent fiduciary to the plan in order to collect, marshal and administer the plan. The defendants will reimburse the plan for AMI’s reasonable fees and expenses with respect to services performed for the plan.

Deals & People October 23, 2015

Retirement Industry People Moves

This week brings new hires at Northern Trust Asset Management and SageView Advisory, and a business deal for Alliance Benefit Group.
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Tony Politano has joined Northern Trust Asset Management as senior client investment officer in the multi-manager investment outsourcing practice.

Politano is responsible for managing institutional investment programs for Canadian clients, including the development of investment policies, asset allocation recommendations, risk management, investment manager search and selection, and portfolio construction.

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Politano, who has 20 years of experience in investment consulting, investment manager research and client service, was most recently senior investment consultant at Aon Hewitt Investment Consulting. His background includes providing investment consulting services to public and private pension plans, foundations and insurance company clients.

Andrew Smith, practice executive for Northern Trust Asset Management in Canada, cites Politano’s experience advising pension plans, foundations and insurance companies on asset mix, investment policy, risk management, and investment manager selection. Politano is based in Toronto.

Prior to Aon Hewitt, Politano was manager, investment management at Alderwoods Group Inc. and also held investment related roles at The Canada Trust Company, and Global Securities Services.

Politano holds a bachelor’s of commerce degree from University of Toronto and the Chartered Financial Analyst (CFA) designation. He is a member of the Toronto CFA Society.

NEXT: SageView Advisory Group expands footprint with Honolulu office.

David Lum has joined SageView Advisory Group’s new Honolulu office as managing director. Lum, who has more than 25 years of experience providing retirement plan consulting services, is an investment professional with expertise in both defined benefit and defined contribution Employee Retirement Income Security Act (ERISA) plans, as well as endowments, foundations, and corporate plan sponsors. Lum will be a lead contact for new clients and will oversee client and team responsibilities for the branch office.

Previously, Lum held a senior leadership role in Bank of Hawaii’s investment management services department. He has spoken frequently about topics including capital markets, employee benefit issues and ERISA fiduciary matters.

Lum holds a bachelor’s degree in business administration in finance from the University of Hawaii. He holds the Accredited Investment Fiduciary Analyst (AIFA) designation from the Center for Fiduciary Studies in association with the Joseph M. Katz Graduate School of Business at the University of Pittsburgh. He was also awarded the Certified Investment Management Analyst (CIMA) designation from the Investment Management Consultants Association.

Randy Long, SageView’s founder and CEO, said strengthening the firm’s Hawaiian presence has been a priority. Steven Edwards and Wanda Sanchez also join the Honolulu branch as retirement plan specialists. SageView opened the office on the heels of increased demand for client-focused retirement plan consulting services.

NEXT:Alliance Benefit Group sells its recordkeeping, administration and payroll unit.

Alliance Benefit Group North Central States Inc. (ABGNCS) said its employee benefit administration/recordkeeping division is merging with Alerus Financial N.A., a multibillion-dollar financial services company in Grand Forks, North Dakota.

The transaction involves only the recordkeeping, administration, and payroll services division of the organization. Employee Benefits consulting, investment advisory and personal wealth management divisions are not being sold, and will continue under the ownership of Brad Arends and Grant Arends.

Most ABGNCS employees will transition to Alerus, and the ABGNCS location in Albert Lea, Minnesota, will become a significant processing site for the growth of Alerus’ services. This merger will bring retirement recordkeeping/administration clients of ABGNCS continuity in service staff; a faster, more robust recordkeeping platform; enhanced cyber security and disaster recovery systems; and trustee/custody/paying agent services tightly integrated with recordkeeping/administration services. Clients also gain size and scale to remain competitive, according to Arends.

The acquisition also brings to Alerus complementary employee benefit recordkeeping and administrative services. ABGNCS’ existing staff will deliver payroll, health savings account, flexible spending account (FSA), health reimbursement arrangement (HRA), and COBRA services to their clients.

Brad Arends notes that the two firms share similar business goals and basic core values, and cites Alerus for its ability to support substantial growth on a national scale.

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