It is more important for enforcers of the Employee Retirement Income Security Act to get compliance from financial advisors than to litigate with them and impose penalties, says Phyllis Borzi, assistant secretary of labor at the Employee Benefits Security Administration.

In a speech Tuesday to the American Bar Association’s ERISA Litigation National Institute, Borzi said her unit’s biggest enforcement problems with advisors are with those professionals who do not stand behind their work.

“It is important to hold people accountable for advice they give,” said Borzi, head of the U.S. Department of Labor's ERISA unit.

She noted a common problem is caused when an advisor tells a small employer how to structure a 401(k) plan, and after that the plan is found to violate the law for unreasonable fees or undisclosed compensation.

Often in these situations, Borzi said, advisors will claim they are not responsible.

She added her “favorite” excuse is when an advisor claims he didn’t believe that his recommendation would be the primary reason a business owner chose a plan.

Borzi said criminal cases often result from investigations of whether financial advisors received improper or undisclosed compensation.

Last year, Borzi said her unit received 240,000 inquiries from the public on pension plans. Those questions led to 565 investigations of businesses and professionals, and in 72 percent of those cases problems were found and corrected. Approximately $1.2 billion was recovered for pension plans and participants last year, she said.

She added there were 318 criminal investigations with 117 individuals indicted and 78 pleading guilty or convicted.

With employee stock ownership plans, Borzi said, the primary violation continues to be the incorrect valuation of employer securities. “These cases often involve large amounts of money,” she said.

Borzi said her section is starting to focus on large cases with greatest impact on plan assets.