U.S. Labor Department obtains appointment of independent fiduciary for abandoned 401(k) plan of New York City company

Archived News Release — Caution: Information may be out of date.

New York – The U.S. Department of Labor has obtained a federal court order appointing an independent fiduciary to manage the abandoned 401(k) plan of New York City-based American Financial Services Inc.

Under the court order, entered in the U.S. District Court for the Southern District of New York, Jacqueline M. Carmichael is appointed to be the independent fiduciary of the plan. Carmichael will administer the plan; distribute the assets to participants, beneficiaries and any plan creditors; and terminate the plan.

The Labor Department filed suit this past June after learning that the company, which was located at 2 World Trade Center in Manhattan, ceased operations after the terrorist attacks of September 11, 2001. At that time, the plan trustee stopped performing his duties and the president of the company did not appoint a successor fiduciary. The Employee Retirement Income Security Act (ERISA) requires that employee benefit plans be managed by named fiduciaries. Without a fiduciary, plan participants and beneficiaries cannot obtain information, access accounts to make investments or collect retirement benefits.

Plans become “orphan plans” when they are abandoned by all fiduciaries designated to manage and operate them. As of February 8, 2006, the plan had 10 participants and $22,288.67 in assets.

“The Labor Department recognizes the extraordinarily difficult circumstances this company faced,” said Jonathan Kay, regional director in New York for the Labor Department’s Employee Benefits Security Administration (EBSA). “We took this legal action to protect the 401(k) plan’s participants by ensuring that they receive their retirement funds.”

The Labor Department’s 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 toll-free at 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. American Financial Services Inc. 401(k) Plan
Civil Action Number: 07-CV-4845

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Archived News Release — Caution: Information may be out of date.