The only time Kansas City Royals first baseman Mike Sweeney led the league in anything, it was in 2000, when he was hit by pitches more times (15) than anyone else.
According to a recent lawsuit, Sweeney also got plunked by his investment counselors —right in the wallet. And now the U.S. Department of Labor is trading on his elevated (if not high) profile to both warn money managers to take care with their clients’ dough, and to encourage people to choose thoughtfully when they select someone to whom they will entrust their retirement dollars.
Sweeney made $11 million a year at his peak with the Royals, investing upwards of $7 million with a long-time advisor who moved from Smith Barney to UBS Financial, taking Sweeney’s account with him.
Sweeney has a high school degree and, while an expert at driving the long ball, had little knowledge about knocking one out of the financial park.
“Because of his lack of experience and sophistication,” his lawsuit against UBS says, “plaintiff relied upon and trusted defendants completely to solicit and purchase investments and create investment strategies that were suitable for him. The defendants had discretion to trade plaintiff’s accounts which elevates the fiduciary duty they owed plaintiff.”
The suit says his advisor convinced him to invest in several “opportunities” that were represented to Sweeney as conservative investment vehicles. Instead, the deals, much more risky than represented, went south, and Sweeney lost nearly $5 million, says the suit.
Where does the DOL come in? Blogs, of course. The DOL has them, just like everyone else, and it devoted a long post recently to touting the resources of its Employee Benefits Security Administration.
Using the Sweeney case as a device, DOL blogger Phyllis Borzi wrote: “Stories like this serve as a reminder to all of us – whether you’re a professional athlete or an armchair quarterback."
"At the Labor Department’s Employee Benefits Security Administration, we believe America’s workers should be able to rely on the experts they hire for investment advice, and never discover that they’ve been misled or that their trust has been misplaced. The official term for this is ‘breach of fiduciary duty,’ but most people simply recognize it as a raw deal.”
For the record, the lawsuit was filed just last month. Whether Sweeney's allegations stick will be up to the court.
In the interim, Brozi’s blog post includes a number of DOL resources that will put you on the retirement All-Star team instead of in the cellar with poor Sweeney.