The Department of Labor (DOL) announced today a $5.2 million settlement agreement with ING Life Insurance and Annuity Co. (ILIAC) that will be paid to certain retirement plan clients of the company. The action stems from ILIAC’s undisclosed practice of keeping investment gains realized when it failed to process requested transactions in a timely manner, states the DOL.
According to a statement from the department, the amount represents net gains pocketed by the company due to how certain transaction processing errors were handled between 2008 and 2011. Failing to disclose its policy on reconciling transaction processing errors to retirement plan clients resulted in ING receiving compensation in violation of the Employee Retirement Income Security Act, or ERISA, DOL contends.
Acting Secretary Seth D. Harris stated that the settlement will restore funds to roughly 1,400 retirement plans. ILIAC has approximately 35,000 ERISA-covered plan clients. It has offices in Connecticut and provides, among other things, custodial and third party administration services to defined contribution plans that are sponsored by business organizations.
“It has been ILIAC’s practice to keep gains derived from processing transactions that it failed to timely process as of the contract date as well as from re-processing erroneous transactions. In both instances, ILIAC makes corrections using the date required by its contract. Gains and losses result when the share or unit value differs between the contract date and the actual trade date. Any gains in share or unit value between the contract date and trade date are kept by ILIAC, whereas ILIAC is obligated, by contract, to make plans whole for any losses,” detailed the DOL in its announcement of the fine.
“This settlement is reflective of my agency’s commitment to enforcing requirements for transparency in the retirement savings marketplace,” assistant Secretary of Labor for Employee Benefits Security Phyllis C. Borzi said in a statement. The DOL’s Employee Benefits Security Administration (EBSA) oversees retirement plans “Failure of a plan fiduciary to disclose the revenue it received from managing retirement plans is a disservice to employers who are providing this benefit to their workers.”