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Archived News Release — Caution: Information may be out of date.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 Orbitex Financial Services Group, Inc., formerly with offices in New York City.

The court order, entered in U.S. District Court for the Southern District of New York, appointed Jacqueline M. Carmichael to be the independent fiduciary of the Orbitex Financial Services Group, Inc. 401(k) Plan. Carmichael, president of JM Pension Advisory, Inc., will administer the plan, distribute its assets to eligible participants and beneficiaries, and terminate the plan.

The Labor Department filed a lawsuit under the Employee Retirement Income Security Act (ERISA), the federal law that protects private sector employee pension, health and other benefit plans. The suit alleged that, 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. ERISA requires employee benefit plans to be managed by named fiduciaries. In the absence of a fiduciary, plan participants and beneficiaries cannot obtain plan information or access accounts to make investments or collect retirement benefits.

Plans become “orphan plans” when they are abandoned by all fiduciaries legally designated to manage and operate them. 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.

Jonathan Kay, regional director in New York for the Labor Department’s Employee Benefits Security Administration (EBSA) said, “It is unfortunate when a fiduciary of an employee benefit plan abandons it and leaves plan participants unable to access their own funds. We took this legal action to protect the 401(k) plan’s participants by ensuring that they receive their retirement funds.”

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

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Archived News Release — Caution: Information may be out of date.