Labor Department Sues Defunct New York Investment Firm Owner Over Excessive Plan Trades

Archived News Release — Caution: Information may be out of date.

New York, New York - The U. S. Department of Labor sued Emerald Capital Management, Ltd. of Rochester, New York and its president on July 20 for imprudently making excessive securities trades with the assets of numerous employee benefit plan clients.

Emerald Capital Management and president William Robert Goodhue served as investment advisors to the plans until April 1997. The company has since been dissolved.

The Labor Department lawsuit alleges that the defendants violated the Employee Retirement Income Security Act (ERISA) in connection with the stock trades. According to the lawsuit, the defendants made excessive trades in plan accounts resulting in annual turnover of assets in excess of 1,000%. The plans paid commissions on these trades and the defendants received substantial recompense as a result of those commissions.

The lawsuit seeks a court order to require that the defendants restore to the plans the amounts of assets which the defendants cost the plans in excessive commissions, plus interest.

This case, filed in federal district court in Rochester, New York, resulted from an investigation conducted by the Boston Regional Office of the department’s Pension and Welfare Benefits Administration into alleged violations of ERISA.

“This action reaffirms our commitment to protect the hard-earned benefits promised by employer,” said James M. Benages, director of PWBA’s Boston Regional Office. “Employers and workers can reach us at 617.565.9600 for help with any problems relating to private-sector pension and health plans.”

(Chao v. Emerald Capital Management, Ltd.
Civil Action No. 01CV 6356T(F))

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Archived News Release — Caution: Information may be out of date.