January 16, 2020

Jim Lundy Comments on Continuing Enforcement Scrutiny of 403(b) Plans and Practices

In their coverage of a recent investigation of a 403(b) provider running a teacher pension plan that resulted in $500,000 in penalties and reimbursements, InvestmentNews reports that some industry professionals believe that it could be a harbinger of a regulatory crackdown in an area that appears to potentially be rife with conflicts of interest. The publication spoke with partner Jim Lundy for insight into the matter.

The State of Delaware’s attorney general recently announced a settlement with the Horace Mann Educators Corp. InvestmentNews reports that the state is the most recent to zero in on 403(b) plans, which are vehicles for teacher retirement savings. The Securities and Exchange Commission and the state of New York also are investigating the sector.

Lundy told the publication that he expects “more [investigations] to come. It’s a reasonable inference that the [SEC] enforcement division has a sweep in this space, although they don’t use that term anymore.”

Financial advisers who work with 403(b) plans should beware of the regulatory scrutiny, Lundy added.

“Firms should take a good look at the financial incentives and revise disclosures as needed,” he said.

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