Enforcement Roundup: Defense Contractor Fined for ‘World Tour’ of Bribery

The fiduciaries of a Bridgeport, Connecticut-based retirement plan have been ordered by the Department of Labor to return a grand total of $485,560.77 to the plan after an Employee Benefits Security Administration investigation revealed that, while deductions were made from employee paychecks, the money never arrived at the plan.

According to the DOL, in 1984, architectural, engineering and interior design firm Fletcher-Thompson Inc. established The Fletcher-Thompson Savings Plan to provide retirement benefits for its participants, company employees and their beneficiaries. Fletcher-Thompson, Inc. is the plan sponsor; Michael Marcinek, the company’s president, managing partner and majority owner, is the plan trustee. Both are fiduciaries of and parties in interest to the plan.

Beginning in 2008, DOL said, the company became delinquent in remitting employee deferrals and loan repayments to the plan. As of May 2012, the company completely stopped making any contributions to the plan. However, it continued to withhold contributions and loan repayments from participants’ pay. As the result of a complaint filed in June of 2014 by DOL against the company and Marcinek, both fiduciaries agreed to a consent judgment. They are required to restore the total amount outstanding, including lost interest, of $485,560.77.

The judgment has ordered them to restore that amount in installments of no less than $40,463.40 per month for 12 months, ensure that nonfiduciary plan participants receive the share to which they are entitled and provide a full accounting to EBSA each month. The order also prohibits Marcinek from ever again serving as a fiduciary to an ERISA-covered benefit plan.

FINRA Fines, Censures Firm on Bond Sale Failures

FINRA censured Fort Lauderdale-based Newbridge Securities Corp., fined it $138,000 and required it to revise its written supervisory procedures after it found that the firm bought and sold corporate bonds but failed to do so at fair prices.

According to the agency, in transactions for or with a customer, the firm did not use reasonable diligence to find the best interdealer market, and also failed to buy or sell in that market so that the customer’s price was the best available under prevailing market conditions. It also failed to execute orders fully and promptly.

FINRA also found that the firm’s supervisory system was not adequate to achieve compliance, with no WSPs providing for any of the four minimum requirements for WSPs regarding corporate bond best execution, sales transactions, Order Audit Trail System (OATS), trade reporting, other trading rules (related to clearly erroneous trades), and other rules. In addition, FINRA found numerous other failures regarding the reporting of short sales, their orders, reporting and ledger inaccuracies and inaccurate report data.

Without admitting or denying FINRA’s findings, the firm consented to the sanctions.