Fidelity faces Galvin inquiry over fees charged for 401(k) plans

Massachusetts' Secretary of the Commonwealth joins the Labor Department in questioning charges some mutual funds face for using Fidelity's platform

Mar 4, 2019 @ 12:30 pm

By Bloomberg News

Fidelity Investments is facing more scrutiny over fees it charges some mutual funds for using its platform to access retirement plan customers.

The Massachusetts Secretary of the Commonwealth said its securities division sent a letter last Wednesday to Boston-based Fidelity requesting information about those fees. The inquiry follows a Feb. 21 lawsuit against Fidelity by an investor in T-Mobile USA Inc.'s 401(k) plan that claims the firm conceals so-called infrastructure fees.

The fees are also being probed by the Labor Department, the Wall Street Journal reported last week. A spokesman for the Department of Labor said the agency declined to comment on that report.

The Secretary of the Commonwealth's office declined to provide a copy of the letter but said in an email to Bloomberg it has requested the following information:

• Identity of all Massachusetts pension and retirement plans for which Fidelity is a fiduciary or service provider.

• Details of all fees payable by funds to Fidelity.

• Description of the infrastructure fee payable by funds on the network.

• Identity of Fidelity units that receive the fee.

• Whether the fee is disclosed to investors, and if so, how the disclosure is provided.

Fidelity spokesman Vincent Loporchio said that the company doesn't comment on communications with regulators. He said in a statement last week that the "infrastructure fee has been fully disclosed to 401(k) plans and their sponsors via a disclosure that Fidelity sent to over 20,000 401(k) plans." Fidelity denies the lawsuit's allegations and will vigorously defend itself, Mr. Loporchio said.

The state securities division is overseen by Secretary of the Commonwealth William Galvin, who has played a key role in policing the mutual fund and securities industries.

In 2002, Mr. Galvin's office, along with then-New York Attorney General Eliot Spitzer, played a key role in probing whether Wall Street firms misled investors with biased investment research. In an agreement with state, federal and industry groups several firms agreed to pay $1.4 billion to settle such claims.

Fidelity had $2.4 trillion in assets under management as of Dec. 31.

(More: Are the economics of active management becoming unsustainable?)

0
Comments

What do you think?

View comments

Most watched

INTV

How the 2020 elections could impact ESG investing

Joseph Keefe, president of Impax Asset Management, on the elections and how advisers can build a bridge to the next generation of clients with ESG investing.

INTV

How advisers can be a gamechanger for women investors

Why women defer to men when it comes to finances and how advisers can combat this phenomenon and make a difference for female investors, according to Heather Ettinger, founder and CEO Luma Wealth Advisors.

Latest news & opinion

Schorsch, AR Capital to pay $60 million to settle SEC charges

The former REIT czar and his firm wrongfully obtained millions linked to REIT mergers.

CFP Board postpones enforcement of its revised fiduciary standard

Board's new Code of Ethics and Standards to be enforced next June, in line with the SEC's Reg BI

Charles Schwab reportedly in talks to buy USAA brokerage, wealth management business

The deal would net Schwab roughly $100 billion in new assets.

Advisers scramble to help retirees navigate looming Fed rate cut

The Fed's first interest-rate cut in a decade has advisers warning against chasing the bait of risk over safety.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print