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Regulation and Compliance > Federal Regulation > SEC

Utah 529 Plan Settles With SEC

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Utah’s 529 college savings plan has agreed to settle charges it misled investors about the disposition of funds earmarked for college savings accounts.[@@]

The U.S. Securities and Exchange Commission says it has agreed to settle charges in connection with allegations that the Utah Educational Savings Plan Trust, a 529 plan, had falsely stated that the misappropriated funds were “administrative” in nature. In fact, the SEC says, the funds should have gone to participants’ college savings accounts.

According to the SEC, UESP fired its director, Dale C. Hatch, early in 2004 after finding he had allegedly misappropriated funds by taking advantage of flaws in the agency’s administrative and accounting systems. Those flaws, which failed to allocate some gains and losses to investor accounts, allowed Hatch to pocket the funds by assigning them to his own personal accounts, the SEC charges.

However, the UESP publicly mischaracterized the misappropriated funds as “administrative” and falsely told investors they had not been harmed, the SEC says. The SEC also is charging the UESP with inadequately disclosing defects in its operations and accounting practices.

The UESP agreed fully to refund investor accounts and to correct the defects of its system.

Separately, the SEC filed a civil action against Hatch in federal court charging him with putting more than $500,000 of unallocated participant funds into his own 529 accounts and transferring $85,000 of those funds to his personal bank accounts.

The UESP consented to the commission’s order without admitting or denying its findings. The UESP already has repaid investors in full, the SEC says.

In a related matter, the SEC issued a new guide that explains the differences between 529 plans, which vary from state to state, including disclosure requirements and tax implications.

The guide can be found online at


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