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.