Money Management Executive
SEC Suspects Kickbacks to Retirement Consultants
October 26, 2004, 1:00 a.m. EDT 1 Min Read
The Securities and Exchange Commission fears that investment companies may have paid retirement-plan consultants in order to steer business their way, The Wall Street Journal reports.
A probe that began last December and looked into possible conflicts of interest in the financial-services industry has uncovered "troubling" evidence not yet announced as full-fledged proof of improper payments to the pension planners. The evidence, though, seems damaging enough that some consultants and money management firms may soon face SEC action.
A retirement subsidiary of Marsh & McLennan, the insurance giant and parent company of Putnam Investments, has already come under SEC questioning. The company, Mercer Investment Consulting Inc., admitted that the Commission had questioned it about business that was sent Putnams way. However, in a statement, Mercer said it does not "request, require or accept payment from investment managers in order for them to be included or recommended in a manager or mutual-fund search."
While it is not against the law for pension planners to take money for things like organizing conferences and designing software, industry pessimists argue that the fees for such services are often exorbitantly high, and act as a "back door payment" of sorts. In other words, if a pension planner pushed his clients toward a certain plan, perhaps that planner would receive more money for organizing a conference than the planner who did not push his clients toward that plan.
___
The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.
For reprint and licensing requests for this article,
click here.
Money Management Executive
