The Geller Group LLC, a New York retirement plan administrator and registered investment adviser, has confirmed in internal memoranda that it is being investigated by the Labor Department.
“The Department of Labor began an investigation of Geller Advisory Group in December to examine our third-party plan administrator and registered investment advisory business,” James English, head of the firm's client relationship management unit, wrote to his colleagues this month.
“We responded to a request for information in January. We are examined by regulators from time to time as is common in our industry. We expect no adverse consequences from the investigation,” Mr. English wrote.
As previously reported, people close to the investigation, as well as former employees, said that the government is probing whether Geller had a conflict of interest by recommending to its pension plan clients that they use an auditor in which it allegedly held an undisclosed interest. The auditor, Caesar & Associates, worked out of Geller's Midtown Manhattan headquarters, its employees for several years received checks directly from Geller, and Geller officials reportedly signed off on some of the audits.
Sheldon Geller, who began the company with his former father-in-law about 25 years ago and sold a majority interest in the firm in 2006 to Focus Financial Partners LLC, said in an interview this month that he was unaware of an investigation of his firm.
On Feb. 9, in response to an
InvestmentNews article reporting the investigation, Mr. Geller wrote in an internal memo that the firm's lawyer had spoken with the Labor Department the previous day and learned that she was investigating “the way in which our clients purchase mutual funds for the retirement plans.”
At least three investigators are working on probes related to Geller, including one who is with the Labor Department's Office of Labor Racketeering and Fraud, sources said.
In his memo, Mr. Geller noted that Caesar & Associates previously has been reviewed by the Labor Department, without commenting on the results. Mr. Caesar said that the Labor Department's Employee Benefits Security Administration referred his case to the American Institute of Certified Public Accountants' ethics division and that he is contesting the EBSA's conclusions.
Mr. Geller's memo said that the EBSA investigator told his firm's lawyer that the Labor Department was the only “agency involved in the investigation.”
Several sources with knowledge of the case and lawyers familiar with other Labor Department probes said that investigators could refer the probe to the Justice Department and share their findings with such agencies as the
Internal Revenue Service and the Securities and Exchange Commission.
Mr. Geller's memo encouraged employees to share its content with “any client or other person” who asks about the article. It also said that executives at Focus Financial Partners, Geller's parent company, believe that the source of the story was a “former disgruntled employee,” and it was based on “half facts, unwarranted assertions and is blown out of proportion.”
Loretta Mock, a spokeswoman for Focus, said that the company “cannot make any comment on this right now.”
E-mail Jed Horowitz at [email protected].
