USI Advisors Inc. has agreed to pay nearly $1.3 million to 13pension plans to resolve alleged violations of the EmployeeRetirement Income Security Act.

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An investigation by the U.S. Department of Labor’s EmployeeBenefits Security Administration found that the Glastonbury,Conn.-based fiduciary investment advisor made investments in mutualfunds on behalf of ERISA-covered defined benefit plan clients andreceived 12b-1 fees from those funds. A 12b-1 fee is paid by amutual fund out of fund assets to cover certain expenses.

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The company failed to fully disclose receipt of those fees, andto use those fees for the benefit of the plans either by directlycrediting the amounts to the plans or by offsetting other fees theplans would be obligated to pay the company.

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"If you, as an investment adviser, are a fiduciary under ERISAwith respect to plan investments in mutual funds, you cannot useyour fiduciary authority to receive an additional fee or to receivecompensation from third parties for your own personal account intransactions involving plan assets. We are very pleased that thissettlement addresses the problems we identified with USI'spractices and restores funds to the plans and their participants,"said Phyllis C. Borzi, assistant secretary of labor for employeebenefits security. "We are also very pleased that recentlyfinalized fee disclosure regulations issued by the Labor Departmentwill require fiduciaries like USI to be more transparent about thefees they receive when dealing with their plan clients."

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Under the terms of the settlement, USI Advisors has agreed notto provide bundled investment advisory and actuarial services toany ERISA-covered defined benefit plan client without firstentering into a written agreement, contract or letter ofunderstanding that specifies the services provided and whether thecompany or its affiliates will act as a fiduciary to those plans.USI Advisors also will provide to clients a description of allcompensation and fees received, in any form, from any source,involving any investment or transaction related to them.

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The alleged violations in this case occurred between 2004 and2010. USI Advisors is a wholly owned subsidiary of USI ConsultingGroup, a Goldman Sachs Capital Partners Co.

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