The Department of Labor’s Employee Benefits Security Administration (EBSA) recently fined Morgan Keegan for violating its fiduciary obligations in recommending certain hedge funds of funds to ERISA pension plans in return for improper revenue sharing payments. Morgan Keegan, which has been the subject of numerous FINRA arbitrations and regulatory proceedings over the past several years recently was acquired by Raymond James. In our view, this type of wide-scale brokerage firm misconduct is reflective of the type of high-level wrongdoing that has hurt investors nationwide.
The alleged violations occurred between April 2001 and November 2008, EBSA says. According to EBSA, Morgan Keegan agreed to pay $633,715.46 to 10 pension plans as a fine.
The EBSA said that “The law is very clear: If you accept a fee to give investment advice to a retirement plan, you are a fiduciary and must therefore act solely in the best interests of the participants in that plan.” Third-party payments, she said, “should never be the motivating factor behind which investments brokers and advisors steer retirement clients into.”