The Labor Department contacted Putnam Investments, Fidelity Investments, INVESCO Funds Group and AIM Advisors in connection with a broad investigation of fees, fee disclosure and compensation arrangements among service providers to 401(k) and pension plans, officials at the firms confirmed. The investigation could result in lawsuits and other enforcement actions against fiduciaries for violations of federal pension law.
"We are looking at a number of issues, including whether fiduciaries are accepting improper payments for directing investments, whether fiduciaries have used plan accounts to facilitate late trading/market timing of other clients, and whether plans have incurred losses as a result of fiduciaries knowingly directing investments to mutual funds or pooled accounts which permitted late trading or market timing," said Assistant Labor Secretary Ann Combs.
Ms. Combs said the department is coordinating its efforts with the SEC, which is also investigating fee arrangements between service providers and plan sponsors. The Labor Department probe is looking for ERISA violations, while the SEC is investigating securities law violations.