While Jerome Schlichter was surprised by the lack of activity by the DOL when he began his 401(k)-related lawsuits almost 10 years ago, it seems that the agency is now making up for lost time. According to Drinker Biddle & Reath’s Bruce Ashton, speaking at a recent industry conference, the DOL is somewhere between more aggressive and “out of control.” In fact, last year there were 3,600 investigations, resulting is $1.7 billion in fines and settlements.
The problem, Ashton said, is that the DOL is asking for information beyond its jurisdiction, conducting open-ended investigations by personnel who are not well-trained in some respects. That can cause major business disruptions for clients. For example, one hybrid advisor was asked for a list of all wealth-management and mutual-fund clients, as well as the advisor’s general ledger, in addition to related retirement files, such as 408(b)(2) filings. They also contacted that advisor’s clients to inform them about the investigation.
