U.S. Labor Department Sues to Appoint Independent Fiduciary For 401(k) Plan Abandoned by New York City Company

Archived News Release — Caution: Information may be out of date.

New York – The U.S. Department of Labor has filed a lawsuit asking the U.S. District Court for the Southern District of New York to appoint an independent fiduciary to oversee the abandoned 401(k) plan of Orbitex Financial Services Group Inc.

The plan was sponsored by Orbitex Financial Services Group Inc., formerly with offices in New York City. Around February 2006, the plan fiduciaries abandoned the plan after failing to properly terminate it and distribute its assets to the eligible participants and beneficiaries.

The Employee Retirement Income Security Act (ERISA) requires employee benefit plans to be managed by named fiduciaries. In the absence of an active trustee, plan participants and beneficiaries cannot obtain plan information or access accounts to make investments or collect retirement benefits.

The Labor Department’s suit asks the court to appoint an independent fiduciary to administer the plan, distribute its assets to plan participants and beneficiaries, and oversee the plan’s termination. As of July 3, 2006, the plan had 15 participants and $175,885 in assets. MG Trust Company LLC is the custodian of the funds.

“When an employee benefit plan is abandoned, so are the workers who invested in it,” said Jonathan Kay, regional director in New York for the Labor Department’s Employee Benefits Security Administration (EBSA). “We took this legal action so the plan will be properly managed and its participants can access the funds that rightly belong to them.”

The suit resulted from an investigation by EBSA’s regional office in New York. Employers and workers can contact the office at 212.607.8600 or EBSA’s toll-free number, 1.866.444.EBSA (3272), for help with problems relating to private-sector pension and health plans.

In fiscal year 2006, EBSA achieved monetary results of $1.4 billion related to pension, 401(k), health and other benefits for millions of American workers and their families.

(Chao v Orbitex Financial Services Group, Inc. 401(k) Plan)
Civil Action Number: 07-CV-4843

U.S. Department of Labor news releases are accessible on the Department's Newsroom page. The information in this news release will be made available in alternate format upon request (large print, Braille, audio tape or disc) from the COAST office. Please specify which news release when placing your request at 202.693.7828 or TTY 202.693.7755. The U.S. Department of Labor is committed to providing America's employers and employees with easy access to understandable information on how to comply with its laws and regulations. For more information, please visit the Department's Compliance Assistance page.

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