According to the Atlanta Business Journal, AirTran, which used a director for Stanford Group Cos. as its 401(k) plan adviser, said its employees’ retirement plans are not in any danger. “There’s no exposure in any way,” airline spokesman Tad Hutcheson told the paper.
The Houston-based investment advisory firm was accused of running a “massive and ongoing” fraud, according to an emergency complaint filed February 16 by the Securities and Exchange Commission to halt the firm’s operations (see Another Billion-Dollar Investment Advisory Fraud Unfolds ) .
The SEC’s complaint alleges the company misled investors to buy certificates of deposit and other products by misstating investment returns. “Stanford Financial Group is the investment advisor to the 401(k) plan,” Hutcheson told the ABJ. However, “It does not manage or hold any of the money” in the employee 401(k) plan, he said.
“I want you to know that none of the AirTran pilots’ retirement money is in any of the Stanford off shore accounts,” Ron Burkhart, the president of the AirTran pilots union wrote to his fellow pilots, according to the report, “Our advisor is employed by a different subsidiary of the Stanford Group. Our accounts are with Fidelity as the bookkeeper and the different fund choices we have do not include any Stanford funds.”
The adviser, Stanford Group Company of Atlanta, Georgia, provides guidance to AirTran employees regarding about two-dozen Fidelity-branded or managed mutual funds offered in the airline’s 401(k) program.
“We have been assured by Fidelity that there are no Stanford-related investment products involved in the mutual funds our employees are invested in,” Hutcheson said, adding the airline is “carefully monitoring” the situation.