The Department of Labor is suing Zenith Capital and executives Rick Lane Tasker, Michael Gregory Smith and Martel Jed Cooper, accusing them of receiving undisclosed incentive fees for investing pension fund client assets in a hedge fund.
The lawsuit, filed in U.S. District Court in San Francisco, claims executives violated their fiduciary responsibilities under ERISA in making the investments in hedge fund Global Money Management between April 1999 and September 2003, according to a news release from the Labor Department.
The incentive fees were paid by LF Global Investments, the manager and general partner of Global Money Management that also had an ownership interest in Zenith.
Global Money Management's remaining assets have been frozen by the SEC, which also has secured the appointment of a receiver. The lawsuit seeks to have the defendants restore any losses to the plans, undo the transactions and ban them from "serving in a fiduciary or service provider capacity to any employee benefit plan governed by ERISA."
Zenith had 1,214 clients and roughly $538 million in assets under management in 2004, according to data from the DOL.