EBSA Press Release: Labor Department Sues John Hancock And Subsidiary [03/26/1996]

For more information call: 202/219-8921
 

The U.S. Department of Labor has filed a lawsuit against John Hancock Mutual Life Insurance Company in Boston and its subsidiary, Independence Investment Associates (IIA) charging them with violating federal pension law.

IIA allegedly received more than $615,000 in investment management fees from an employee benefit plan sponsored by John Hancock. The department alleges that a firm cannot pay its subsidiary to manage pension funds except for actual expenses involved. It claims the $615,000 were not actual expenses and instead represent either profit, overhead or expenses IIA would have incurred even without providing services to the plan.

John Hancock's pension plan covered 9,953 participants and had more than $500 million in assets as of December 1993. Besides insurance, John Hancock also provides investment services to benefit plans and other clients nationwide.

John Hancock appointed IIA to manage a portion of the pension plan's assets in March 1986. The lawsuit seeks to have John Hancock and IIA reverse all prohibited transactions and restore any profits to the plan.

The court action was a result of an investigation by the Boston Regional Office of the Department of Labor's Pension and Welfare Benefits Administration into alleged violations of the Employee Retirement Income Security Act. The suit was filed yesterday in the federal district court in Boston.

(Reich v. John Hancock Mutual Life Insurance Co.) Civil Action #96-10608

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