Merrill Lynch agrees to restore more than $170,000 to settle with US Labor Department over allegations of pension plan misconduct in Alabama

MONTGOMERY, Ala. – Merrill Lynch, Pierce, Fenner & Smith Inc. has settled allegations made by the U.S. Department of Labor that the company and one of its employees violated the Employee Retirement Income Security Act by failing to prevent the fiduciaries of pension plans of two Alabama-based companies from engaging in prohibited transactions. The out-of-court settlement requires Merrill Lynch to restore a total of $170,854 to the plans and provide additional training to its investment advisers serving as fiduciaries of employee benefit plans.

The agreement follows allegations by the Labor Department’s Employee Benefits Security Administration that fiduciaries of the Amtren Corp. and Otorhinolaryngology Associates PC profit-sharing pension plans made improper loans. Gilbert Meadows III, an investment adviser at Merrill Lynch’s Montgomery branch office, provided advisory services to both plans. EBSA alleged that Meadows knew the loans were imprudent and considered prohibited transactions under ERISA but failed to take reasonable efforts to remedy these breaches of duty by his co-fiduciaries.
 
“Financial advisors to pension plans have a fiduciary responsibility to act solely in the best interests of plan participants,” said Isabel Colon, EBSA’s regional director in Atlanta. “We are pleased that Merrill Lynch recognizes that its advisers have an obligation to fully meet the standards set by ERISA.”

Merrill Lynch has restored $56,599 to the Otorhinolaryngology Associates plan, and also has agreed to restore $114,255 to the Amtren plan once an independent fiduciary is appointed at Merrill Lynch’s expense to administer the plan. Additionally, Merrill Lynch will issue a written notice and provide training regarding the fiduciary and co-fiduciary obligations imposed by ERISA to all of its financial advisers who are acknowledged fiduciaries under the company’s Personal Investment Advisory program.

Merrill Lynch will place Meadows under a heightened supervision plan for two years, and he will be required to complete additional professional education before being allowed to serve as a financial adviser or other fiduciary to any ERISA-covered employee benefit plan. The company also will conduct a self-audit of all other ERISA-covered employee benefit plans among its clients for which Meadows is or was a financial adviser. Finally, the company will conduct quarterly reviews of Meadows’ performance with respect to ERISA-governed plans for a period of two years.

This case was investigated by EBSA’s Atlanta Regional Office. The settlement was reached with the assistance of the Labor Department’s Regional Office of the Solicitor in Atlanta. Employers and workers can contact EBSA at 404-302-3900 or toll-free at 866-444-3272 for help with problems relating to private sector retirement and health plans. For more information, visit www.dol.gov/ebsa.

U.S. Department of Labor news materials are accessible at www.dol.gov. The information above is available in large print, Braille, audio tape or disc from the COAST office upon request by calling 202-693-7828 or TTY 202-693-7755.