follows an investigation by the U.S. Department of Labor’s (DOL) Employee
Benefits Security Administration (EBSA) that found the full-service brokerage
company violated federal law when it recommended certain hedge funds of funds as
investments to its ERISA-covered employee benefit plan clients. These
recommendations resulted in the hedge funds-of-funds paying Morgan Keegan
revenue-sharing and other fees.
terms of the settlement, Morgan Keegan agreed to disclose to its ERISA plan
clients whether the company will act as a fiduciary to those plans. If the
company is acting as a fiduciary, it will specify the services that it is
providing. Morgan Keegan also will provide to these clients a description of
all compensation and fees received, in any form, from any source, involving all
related investments or transactions. The company either will not collect
commissions or, if it does collect them, refund to its ERISA plans clients 100%
of the amount collected from third parties.
“The law is
very clear: If you accept a fee to give investment advice to a retirement plan,
you are a fiduciary and must therefore act solely in the best interests of the
participants in that plan,” said Phyllis C. Borzi, assistant secretary of labor
for employee benefits security. “Third-party payments should never be the
motivating factor behind which investments brokers and advisers steer
retirement clients into.”
violations occurred between April 2001 and November 2008. Morgan Keegan is
based in Memphis, Tennessee and currently is owned by Regions Financial Corp.
of Birmingham, Alabama.