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Compliance October 24, 2008
DoL Sues California RIA for Undisclosed Incentive Receipt
October 24, 2008 (PLANSPONSOR.com) - The U.S.
Department of Labor (DoL) has sued Zenith Capital LLC of
Santa Rosa, California, and its executives for investing the
assets of 13 retirement plan clients in the hedge fund Global
Money Management LP and receiving undisclosed incentive fees
from the hedge fund's sponsor and manager.
Reported by Fred Schneyer
According to a news release, the DoL lawsuit alleges that Zenith Capital and executives Rick Lane Tasker, Michael Gregory Smith, and Martel Jed Cooper violated their fiduciary obligations under the Employee Retirement Income Security Act (ERISA). The defendants allegedly made investment decisions for their ERISA plan clients.
From April 1999 to September 2003, the defendants caused the plans to invest in Global Money Management and received undisclosed incentive fees from LF Global Investments LLC, the general partner and manager of Global Money Management, the government charged.In addition to paying Zenith incentive fees not disclosed to the 13 ERISA plan clients, LF Global held an ownership interest in Zenith.
In 2004, Zenith Capital LLC was a registered investment adviser with 1,214 clients and approximately $538 million in assets under management.
“We will vigorously pursue investment advisers who try to line their own pockets by illegally steering pension investments. Fiduciaries must invest solely in the interests of the workers to whom these funds ultimately belong,” said Bradford P. Campbell, assistant secretary for the Labor Department’s Employee Benefits Security Administration (EBSA), in the news release.