News reports at the beginning of the month announced that the New York State Department of Financial Services is planning to investigate sales of annuities in the 403(b) retirement plan market.
Now a client alert from law firm Jenner & Block confirms that the Securities and Exchange Commission (SEC) is conducting its own investigation.
According to Jenner & Block attorneys, the SEC “sent letters to companies that administer Section 403(b) and 457 retirement plans, opening an investigation to determine whether violations of federal securities laws have occurred in the plans’ administration. The SEC is seeking details on how the plan administrators, which often serve crucial roles in selecting investments for the retirement plans of employees including teachers and government workers, choose investment options and police themselves when conflicts of interest arise.”
The client alert states that the “SEC also is requesting (1) documents pertaining to any compensation that the administrators have received since January 1, 2017 for referring investors to specific investment options or companies; (2) explanations of any gifts that administrators have received from companies that sell investments; (3) ‘information and documents’ pertaining to how administrators provide investment counseling to investors; and (4) organizational charts that show companies that own or have ties or partnerships with 403(b) and 457 plan administrators.”
The attorneys say the investigation has not been made public, and it is unclear how many plan administrators have received letters.
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