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Outrageous:
Benefits Manager Acted as Broker
Office of Education employee collected at least $355,000 in commissions as a broker for AIG.
Dan Otter
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Benefits Manager Acted As Broker Collected 355K from AIG
#2
Posted 17 March 2009 - 07:22 PM
What a great story!
I remember Dan P. when he started FBC. I knew something was up back then. I remember "his guys" contacting all the employees who were currently flowing...into anything - attempting to move them into their program.
The original FBC program wasn't too bad as I recall. He must have done the ol' switcheroo (a technical term) at some point.
The school districts have no clue so you really can't blame them. The idea of competition is a foriegn concept to many school administrators. We are seeing that up here in LA County with TDS. The district is letting them go into every school and tell their story. Would it make sense to have someone else come in and let the employees know about ALL the options available? Sure, in the real world. But district world is much, much different.
I remember Dan P. when he started FBC. I knew something was up back then. I remember "his guys" contacting all the employees who were currently flowing...into anything - attempting to move them into their program.
The original FBC program wasn't too bad as I recall. He must have done the ol' switcheroo (a technical term) at some point.
The school districts have no clue so you really can't blame them. The idea of competition is a foriegn concept to many school administrators. We are seeing that up here in LA County with TDS. The district is letting them go into every school and tell their story. Would it make sense to have someone else come in and let the employees know about ALL the options available? Sure, in the real world. But district world is much, much different.
#3
Posted 17 March 2009 - 08:08 PM
QUOTE(Groundswell @ Mar 17 2009, 05:22 PM) 
The idea of competition is a foriegn concept to many school administrators. We are seeing that up here in LA County with TDS. The district is letting them go into every school and tell their story. Would it make sense to have someone else come in and let the employees know about ALL the options available?
But in defense of TDS, it offers Vanguard in my district at no extra charge. Of course, its sales force is unlikely to let anyone know about that, but it is an option available for those who do.
#4
Posted 19 March 2009 - 10:28 AM
Imagine that the benefit manager of your 403b and 457 plan was a sales agent who could earn an additional income by selling you products outside the plan. He is also the person who signs off on all distributions from this plan (which makes him a fiduciary) and controls whether you get your distribution or not (which means that you just might get a call if you are rolling out a large amount of money to another broker and this manager sees an opportunity to roll the money to his own products for which he may earn a commission).
Let's pretend that since this is a Government plan it is not subject to the same laws that a 401(k) is subject to.....if in fact everything he is doing is legal, is this an ethically correct way to set up a retirement plan?
Also, in California, state pension laws point to ERISA for guidance, and there is a Fiduciary duty. Wouldn't these commission sales be "prohibited transactions"? What about "self-dealing"?
If this manager was sharing commissions with other brokers, does it matter? How where the commissions generated in the first place and with whom is he sharing them and why? Did each of these brokers who shared the commissions receive 1099's?
Does it seem like this plan should be audited?
It seems like every single commission transaction that took place should be reviewed and cross referenced with employee lists to see what portion of the generated commissions actually came from employees or participants in the plan. It also seems like this plan in general should be independently audited.
Finally, AB 2462 requires some pretty tough disclosures for TPA's.....why haven't they disclosed?
ScottyD
Let's pretend that since this is a Government plan it is not subject to the same laws that a 401(k) is subject to.....if in fact everything he is doing is legal, is this an ethically correct way to set up a retirement plan?
Also, in California, state pension laws point to ERISA for guidance, and there is a Fiduciary duty. Wouldn't these commission sales be "prohibited transactions"? What about "self-dealing"?
If this manager was sharing commissions with other brokers, does it matter? How where the commissions generated in the first place and with whom is he sharing them and why? Did each of these brokers who shared the commissions receive 1099's?
Does it seem like this plan should be audited?
It seems like every single commission transaction that took place should be reviewed and cross referenced with employee lists to see what portion of the generated commissions actually came from employees or participants in the plan. It also seems like this plan in general should be independently audited.
Finally, AB 2462 requires some pretty tough disclosures for TPA's.....why haven't they disclosed?
ScottyD
#5
Posted 19 March 2009 - 01:38 PM
This is the type of situation that happens when one does not have an oversight committee. Several years ago, I talked to the San Diego Teachers Union President about the new 457b plan. I was impressed that she actually had an interest in this plan, but had a difficult time getting teachers interested to form a committee. The article never mentioned an oversight committee so apparently, there isn't any.
Steve
Steve
#8
Posted 23 March 2009 - 01:53 PM
Follow up article, things are heating up:
http://www3.signonsandiego.com/stories/200...o/?zIndex=73852
ScottyD
http://www3.signonsandiego.com/stories/200...o/?zIndex=73852
ScottyD
#9
Posted 23 March 2009 - 03:40 PM
Hi,
This is the part I like:
Joe
This is the part I like:
QUOTE
Trustee Susan Hartley said the county schools office looked into Puplava's dealings and found nothing amiss.
“There's no conflict,” Hartley said. “This is old news to us. We've investigated it already.”
Let's see you mix AIG and $335,000 in commissions with a guy selling products to captive audience, I wonder how long it will take before Susan Hartley sings a different tune.“There's no conflict,” Hartley said. “This is old news to us. We've investigated it already.”
Joe
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