* Agency fines adviser for failing to disclose marketing
* Attorney says Boston-based fee disclosure audits are on
By Jessica Toonkel
NEW YORK, Aug 31 The U.S. Department of Labor
has fined an adviser more than $1 million for failing to
disclose fees it received related to 13 pension plans it
oversees, a sign the agency is toughening its enforcement of fee
disclosure rules, attorneys said on F rid ay.
On Aug. 23, the Labor Department announced that USI
Advisors, a Glastonbury, Connecticut-based fiduciary investment
adviser, agreed to pay $1.27 million for failing to disclose
marketing fees it received from funds in 13 pension plans it
oversaw from 2004 to 2010.
As a fiduciary, USI, a subsidiary of USI Consulting Group, a
Goldman Sachs Capital Partners Co. unit, is required under
Labor Department rules to disclose to clients all fees it
"If you, as an investment adviser, are a fiduciary under
ERISA with respect to plan investments in mutual funds, you
cannot use your fiduciary authority to receive an additional fee
or to receive compensation from third parties for your own
personal account in transactions involving plan assets," Phyllis
C. Borzi, assistant secretary of labor for employee benefits
security, said in an Aug. 23 statement announcing the fine.
A call to USI Advisors on Friday was not returned.
The size of the penalty is significant, given that most
fines over retirement plans range in the thousands of dollars,
said Bradford Campbell, an attorney with Drinker Biddle & Reath
and a former assistant director of the Labor Department's
Employee Benefits Securities Administration.
"This is a cautionary tale," Campbell said. "If you decide
to be a fiduciary adviser to a plan, you need to fully
understand the obligations associated with receiving
The Labor Department in recent months has made fee
disclosure of retirement plan fees a priority, both in its rules
and through its investigations.
Starting in July, advisers and other service providers to
retirement plans had to begin disclosing to their employer
clients all of their fees. On August 30, employers had to begin
disclosing those fees to retirement plan participants.
Particularly in recent months, the Labor Department's Boston
office, which fined USI, has been increasingly active at looking
at fee disclosure, said Marcia Wagner, a principal at The Wagner
Law Group, a Boston-based law firm that works with retirement
"I have definitely seen an increase in audits in the Boston
area," Wagner said. "This is the beginning of a trend."
However, the recent rule that took effect in July requiring
advisers and other service providers to disclose their fees to
employers may help them avoid being fined by the Labor
Department, Campbell said.
"The new rules should help providers make sure they know
they are doing the right thing," he said.