A former employee of George A. Weiss and his GWA firm has sued the investment manager for ERISA violations ranging from self-dealing to a lack of diversification in the company's 401(k) plan.
The retirement plan used its assets "to advance the business interests of GWA LLC and its founder, George A. Weiss, over those plan participants," said the complaint in Beth Andrew-Berry vs. George A. Weiss and GWA LLC.
"This action presents a paradigmatic case of conflicted fiduciaries and their misuse of retirement plan assets to further their own pecuniary interest, in violation of ERISA," said the complaint filed July 24 in a U.S. District Court in Hartford, Conn.
The plaintiff is seeking class-action status, which covers participants and beneficiaries starting July 24, 2017. The lawsuit said at least 187 people are affected.
GWA is a partnership, based in Rocky Hill, Conn., that is involved in securities investments directly or through subsidiaries and/or affiliates, the lawsuit said.
Mr. Weiss is the company's founder and CEO of the company's investment advisory subsidiary Weiss Multi-Strategy Advisers LLC.
Ms. Andrew-Berry worked for George Weiss Associates Inc. or one of its affiliates, from 2016 to 2022, the lawsuit said. She remains a participant in the GWA LLC 401(k) plan.
The lawsuit said the 401(k) plan is not diversified, relying solely on two Weiss funds, "both of which used alternative strategies," and adding that the lineup is "highly unprecedented."
The lawsuit said participants had no choice in selecting 401(k) investments, which were limited to the Weiss Multi-Strategy Partners (Cayman) hedge fund and the Weiss Alternative Multi-Strategy Fund, a mutual fund.
"Unlike the majority of defined contribution plans, which provide a menu of fund options from which employees can choose to invest their retirement savings, here the company retained all control over how employees' retirement savings would be invested and directed those savings entirely into its own investment products," the lawsuit said.
"Ultimately, Defendants invested 100% of the plan's assets in its own proprietary products," noting that plan holds a "small amount" of cash investment to pay participants who take loans from the 401(k) plan or cash out.
"GWA, LLC had knowledge of all the facts and circumstances underlying the breaches of fiduciary duty by other plan fiduciaries such as George Weiss," the lawsuit said.
"Specifically, the company through its officers, executives, employees, and counsel knew that the plan was almost entirely invested in GWA, LLC affiliated investments in order to benefit the company."
The defendants knew the 401(k) was not diversified, that plan fees were excessive and that fees were directly or indirectly transferred to the company or its affiliates in violation of ERISA, said the lawsuit, adding that GWA "took no steps to remedy these breaches or prohibited transactions."
A representative for the defendants did not respond to a request for comment.
GWA LLC 401(k) Profit Sharing Plan, Rocky Hill, Conn., had $91 million in assets as of Dec. 31, 2022, according to the latest Form 5500.
