Teacher retirement plans, or 403(b) plans are similar to workplace 401(k) programs, but participants are not protected by Erisa. As a result, the plans have been a dumping ground for investments with high fees and other costly riders such as surrender charges that often pay reps considerably more. Excessive fees make it more difficult for teachers to obtain an appropriate level of retirement income.
The Drinker Biddle attorneys also pointed to a recent settlement by the Delaware attorney general with the Horace Mann Educators Corp. that resulted in $500,000 in penalties and reimbursements.
“They charged the registered rep and the firm, while it acknowledged it was cooperating, was charged with failure to supervise,” Lundy said.
“For all these reasons, we should anticipate that the SEC’s Division of Enforcement will pursue this particular sweep aggressively,” he added.
The SEC initiative is being led by the SEC’s Enforcement’s Retail Strategy Task Force in partnership with the Commission’s Office of Investor Education.