Iowa-based investment advisor Donald Gene DeWaay Jr. has agreed to a half-million dollar settlement with the U.S. Department of Labor over Erisa violations, DOL announced Monday.
The agreement includes $341,487 DeWaay has paid to 68 pension plans for assessing them higher fees than the clients agreed to and for accepting commissions from third parties for client investments. In addition, he has agreed to pay $212,727 to other plans for similar improprieties.
“By ignoring the best interests of those participants, the defendants in this case didn’t simply violate the law; they violated the faith of conscientious workers who trusted DeWaay and his employees to help them prepare for a secure retirement,” Assistant Secretary of Labor for Employee Benefits Security Phyllis C. Borzi said in publicizing the settlement.
In addition to the monetary sanctions, DeWaay and four investment advisors he employed––Joshua Cross, Paul Espey, Andrew Kleis and Brenton Collins––have agreed moving forward to disclose to Erisa plan clients whether they will act as fiduciaries to those plans.
They have also agreed that either they will not collect commissions from third parties or, if they do, will refund 100 percent to their Erisa plans clients. DeWaay also agreed to be removed as trustee of the DeWaay and Associates’ 401(k) Profit Sharing Plan, and to no longer serve or act as a fiduciary or service provider to the plan.
DeWaay owns or owned three companies based in Johnston, Iowa: DeWaay Capital Management Inc., an investment advisory firm; DeWaay Benefit Administrators LLC, an employee benefit plan administrator and DeWaay Financial Network LLC, a now defunct full-service brokerage company.
The action resolves all legal complaints by DOL against DeWaay. However, his legal troubles in recent years have extended beyond DOL.
In 2011, DeWaay Financial Network said it was facing $24 million in claims from investors who alleged wrongdoing with their participation in risky real estate and oil and gas deals.
Last fall, Donald Gene DeWaay was fined $7,500 by Finra for making exaggerated claims with clients for the DeWaay Financial Network.
And since November 2010, DeWaay has had 24 customer disputes at Finra in his role as a broker-dealer––14 of which are still pending.