Former North Carolina Investment Advisor Barred From Serving Employee Benefit Plans

Archived News Release — Caution: Information may be out of date.

The U. S. Department of Labor has obtained a judgment against a former investment advisor for executing speculative securities investments and “churning” of the account of the Bradford Sales Co. employee stock ownership plan (ESOP) located in Charlotte, NC. The defendant George E. Brooks was permanently barred from serving as a plan fiduciary to any employer-sponsored plans under the aegis of the Employee Retirement Income Security Act (ERISA).

Bradford Sales Co., which manufactures and sells plumbing supplies, originally created the retirement plan as a profit sharing plan and converted it to an ESOP in 1994. The ESOP covered as many as 51 participants and had $2,360,024 in assets as of July 31, 1994.

At the time of the improper trades, Brooks executed the brokerage transactions on behalf of the profit sharing plan. The plan’s trustees filed a complaint with the National Association of Securities Dealers in 1995 and have since recovered $892,218.84 in losses from Brooks and his former employer.

The Labor Department lawsuit alleged that Brooks conducted short-term trading in speculative securities, margin purchases and churning of the plan’s accounts for which he received commissions in addition to quarterly investment fees. Brooks also was alleged to have filed fraudulent Form 5500 reports which did not disclose the margin debt, which resulted in losses to the plan.

The judgment, entered on Sept. 3 in federal district court in Charlotte, N.C., resulted from an investigation conducted by the Atlanta Regional Office of the department’s Pension and Welfare Benefits Administration (PWBA) into potential violations of ERISA.

(Herman v. Brooks)
Civil Action No. 398-CV-288 MU

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Archived News Release — Caution: Information may be out of date.

Contact Name: Sharon Morrissey
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