U.S. Labor Department settlement with Memphis, Tennessee, pension consultants provides restitution of fees and reforms for arrangements with plan clients

Atlanta – The U.S. Department of Labor has obtained a settlement agreement with Consulting Services Group (CSG) of Memphis, Tennessee, and its affiliated broker-dealer providing for restitution to plan clients as well as implementation of reforms and disclosures on compensation and fee arrangements with plan clients in the future. CSG already has paid $277,802.78 and agreed to pay a $27,780 in civil penalty.

The settlement agreement requires full disclosure of compensation and potential conflicts of interest by CSG in all contracts with employee benefit plans governed by the Employee Retirement Income Security Act (ERISA). Under the agreement, CSG must provide specific information describing all compensation received by CSG and its affiliates from any source, how the compensation is determined and whether CSG or any affiliate acquired a financial interest in any transaction to be entered into with ERISA plans. The firm also agreed to refrain from making misrepresentations in marketing materials, and David Meals, the firm’s former chief compliance officer, agreed to refrain from serving as a compliance officer and to limited authority in dealing with employee benefit plans.

In addition, the settlement calls for procedures to ensure that recordkeeping by CSG for ERISA plans is accurate, and invoices provided to plans correctly reflect services provided and the total cost to the plans.

The settlement is based on an investigation by the Atlanta Regional Office of the department’s Employee Benefits Security Administration (EBSA) into alleged violations of ERISA by CSG, Meals and affiliated Trading Services Group Inc. The settling parties allegedly received undisclosed and unauthorized compensation, and failed to timely provide promised commission rebates to certain ERISA plans from 2002 to 2006.

Alan D. Lebowitz, EBSA’s deputy assistant secretary, said, “Our settlement requires that plan fiduciaries receive full and accurate disclosure of all compensation received by their investment advisers so that the plans pay no more than reasonable compensation for their services. Those who provide investment advice to plans must act with undivided loyalty to the plan and its participants.”

The case was conducted by EBSA’s Atlanta office as part of the agency’s Consultant/Adviser Project. Employers and workers may contact the Atlanta office at 404.309.3900 or toll-free at 866.444.3272 for help with problems relating to private sector pension and health plans.