Follow-Up re: Formally Complaining About Bungled 401K Rollover Request

Hello.

I posted here several months ago seeking advice regarding a 401k rollover request that was mis-handled such that I lost money when it was finally liquidated. At the time I asked for advice about how to formally complain about that mis-handling. My original posting is at the end of this message. This message is to provide an update, and to ask some additional questions.

I followed the advice of some, to start with with a complaint to the legal department of the investment firm that employed the individual who essentially blocked my rollover.

I provided that legal counsel a packet of evidence that outlined step by step the misconduct, including dates, emails with headers, summaries of recorded voice mail messages, and so on.

Since then, two things happened.

First, out of the blue, I received a call from the 401K Plan Administrator (my former employer), who had originally deferred my rollover request to the investment firm employee who bungled my request. She said, several months after my original request, that the amount of money I felt I lost suddenly would be credited to my 401K account, after which I could roll that over in addition to my original rollover amount (the amount I felt was less than I should have gotten, but had rolled over to get it out of this strange situation). I didn't expect to see the additional money materialize, but lo and behold - it did, AND the dates on the funds were post-dated to the date I liquidated that first chunk of money (it finally rolled over in December)! I quickly rolled the additional funds over before they vanished as mysteriously as they appeared. This was never called a pay-off. Where they came from was never explained. It was roughly the amount I felt I lost, though.

Second, I eventually received a letter from the investment firm's legal counsel. The letter said my situation was reviewed, and everything I requested was performed back on the date in October when I originally requested it, and the amount was what it should have been back in October. I found this quite surprising, because I have a clear paper trail demonstrating that to be patently false. Even the mystery funds mentioned above were post-dated to two months LATER than October - they were post-dated to December. I guess my evidence was simply ignored.

So - I have my money, but I encountered with what appears to me to be very shady behavior. I will follow up with a letter to the legal counsel to let her know this wasn't lost on me. I am not sure what else, if anything, I will do. However, I wanted to post an update here to find out what others think. Is it industry practice to manipulate funds in such a way as to make things look like they happened in a different order, and on different dates, than they actually did? And, the glossing over of clear evidence - does this sound "normal"? Does this sound like illegal behavior, or just in poor taste? I'd be interested in the views of others with more experience than I have in this area.

--------My original posting, from December of 2007:---------

Hello all. I did a quick search and haven't found any threads to do with filing complaints, so I hope it is an acceptable question for this ng.

I feel that a 401K rollover transaction of mine was mishandled by an employee of a brokerage firm that has some strange involvement in my company's plan. In addition, I have a documented string of emails that prove I was lied to on at least 3 occasions by this person (lies that are a critical part of the overall misconduct). The misconduct by this person cost me several thousand dollars in lost opportunity.

Does anyone know of the best place to file a formal complaint re: misconduct of a 401K rollover request? The person is a certified financial planner, but wasn't really acting in that role for me as far as I can tell. I see that cfp.net has a complaint form and was thinking of starting there anyway. Any advice on a better venue would be greatly appreciated.

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Reply to
Poe
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Poe, if you have the time, then for the sake of potentially many others, I think you should at least report the investment firm's conduct to a higher authority. The evidence as you present it indicates incompetence. Business people, both those high up and low up, get slap happy with power at times, thinking they are immune to being responsible. Whence we get Enrons, Washington Mutuals and the credit crisis of today, and similar. Your pursuing this a bit further falls into the category of "doing the right thing" AFAIC. When there is clear malfeasance or serious misconduct, as you say you feel there has been, it should not be tolerated. Not accepting this makes all our investments and, to take it to an extreme, the entire economy, more secure.

Your post is a fascinating update. If nothing else, it by itself will help others.

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Reply to
Elle

I don't know if you followed it but a Supreme Court opinion just issued in February, about administrator liability to 401k plan participants in cases similar to what you're describing. The case is LaRue v. DeWolff, Boberg & Associates, Inc., google that and you'll find plenty of recent commentary. It significantly broadened the rights of an participant. Before this decision it wasn't clear whether the participant could sue for losses. The answer can be "yes" and given the potential harshness of ERISA liability you may have been an early beneficiary of that decision

- if this just happened very recently.

If I follow your narrative right, the remedy you got sounds equitable - you were put in the position you would have been if the paperwork hadn't been botched, correct? So from a dollars point of view you might considered this resolved.

But no, blocking a 401k rollover is not normal, though I've run across numerous situations where there appeared to be a conscious effort to prevent assets from transferring out (not just in this context, but in account transfers transfers generally).

I agree with Elle that truly shady behavior deserves a response, and if nobody says something, it's more likely to continue. So it's up to you to determine if it crossed the line beyond "botched paperwork", and you think being made whole isn't enough. And if so, the regulatory bodies of interest here are FINRA, for the individual, and the Department of Labor, for the plan generally. Both have avenues for submitting complaints - I don't have links but google will turn them up. You might also use Broker Check (start from

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to see if your written complaint against the individual has been acknowledged through an updated U-4 filing. It may not have been required, so that may not mean anything. But if it was required -- and the filing wasn't done per the deadlines - that could be a regulatory violation in itself.

Skip, sorry for the long post but this is something new that may be of interest to a lot of people -- botched rollover questions come up here periodically, and the Supreme Court only spoke on this two weeks ago. If nothing else, it's more leverage to make sure things are done in a timely manner.

-Tad

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Reply to
Tad Borek

Thanks, Elle!

What higher authority would you recommend reporting this to? I did, in parallel to my other activities, submit a complaint to cfp.net. The first issue I ran into was that I needed to submit my supporting documentation in Microsoft Word (.doc) format. I was using a Mac at the time, and asked if I could submit documentation in PDF form instead. It is superior, as it is less prone to modification. However, I never heard back from them at all, and subsequent queries about this particular broker return no trace of my complaint. When I search on his name to see if there are any complaints against him (like mine), there are none.

So I suppose I can hire a lawyer, but my damages - the "lost opportunity", have been returned. At this point, as you say, it falls into the category of doing the right thing (which was my goal to begin with - I never thought I would see that money I lost). Especially since a lot of folks I consider my friends still work for the company using this broker, I feel like I should say or do something.

Any ideas on agencies to report (what I consider to be) misconduct will be appreciated.

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Reply to
Poe

"Poe" wrote

I defer to what Tad Borek wrote on this. Others reading here may of course propose still other entities to whom you can go. Stay tuned, of course.

In the next day or two, if I learn of other alternatives, I will post them.

Have you called cfp.net at their toll free number,

800-487-1497 to discuss this? If not, consider this and get them back in the loop, your time allowing. Certainly I would document with the agencies Tad recommended that you had attempted to get assistance from cfp.net .

Understood about not wanting to send things in Word format. I suppose you might have to snail mail them, your time allowing.

I agree that, because you have been made whole dollar-wise, a lawyer is no longer necessary. No harm present = no legal claim remaining. So now it's all about industry ethics. As I bet you know, some industries have rules that are as tough as any punishment a court could mete out. Heads can roll. Also, as Kastnna pointed out in December, many inside industry grasp well that incompetents in their business do not serve them well.

Thank you for being an excellent citizen investor. If more people responded as you did, we'd have fewer economic meltdowns and time and emotion wasted in lawsuits that should never have been necessary, and so forth.

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Reply to
Elle

That's not a regulator, it's a trade association that administers a certification mark. Was the guy even a licensee of the CFP mark? If not they have no authority whatsoever, they can't even suspend use of the mark.

-Tad

-------------------------------------- Misc.invest.financial-plan is a moderated newsgroup where Moderators strive to keep the conversations on-topic for financial planning. Other posting guidelines include a request for brevity and another for trimming posts to which we respond. For all of the other tips and suggestions, see "FROM THE MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the Newsgroup.

Reply to
Tad Borek

One thing to keep in mind is that business and professional associations are not always the best place to make complaints about the practices of people belonging to those associations. For example, if a doctor botched an operation, you wouldn't want to rely on a medical association for just compensation, would you? The way organizations protect their own people is legendary, and there is no reason to think that financial organizations would be any different. It is always wise to keep open the option of consulting an outside lawyer of your own choice, who will represent you alone act solely on your behalf. And then, if all else fails, there is the possibility of telling your story to the newspapers and see if that gets any attention.

-------------------------------------- Misc.invest.financial-plan is a moderated newsgroup where Moderators strive to keep the conversations on-topic for financial planning. Other posting guidelines include a request for brevity and another for trimming posts to which we respond. For all of the other tips and suggestions, see "FROM THE MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the Newsgroup.

Reply to
Don

A previous thread indicated he was a "certified financial planner" so, as Elle suggested, I would also continue to pursue CFP.net. And as Tad said, FINRA will deal with the advisor and DOL will deal with the

401k. I have provided their info below.

FINRA:

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recommend reading:
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U.S. Department of Labor: Employee Benefits Security Administration Division of Technical Assistance and Inquiries

200 Constitution Avenue, NW, Room N5625 Washington, D.C. 20210 Toll-Free: 1-866-444-EBSA (3272) Phone: (202) 219-8776

-------------------------------------- Misc.invest.financial-plan is a moderated newsgroup where Moderators strive to keep the conversations on-topic for financial planning. Other posting guidelines include a request for brevity and another for trimming posts to which we respond. For all of the other tips and suggestions, see "FROM THE MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the Newsgroup.

Reply to
kastnna

Yes, he is a certified financial planner. I called the cfp.net 800 number and am pursuing that in parallel to issuing a complaint to FINRA. I will look into filing a complaint with SEC as will, if it makes sense. It is very interesting navigating all this, although it'd have been much simpler for the brokerage firm to handle my complaint honestly internally instead of making up a web of lies I can easily disprove once I get someone to look at the evidence. In fact the firm is digging in deeper than before my complaint - in the letter from the legal department to me, an entirely different story of what happened is emerging. Now we have the broker's first version of events (I can disprove), his several subsequent stories (which can be disproved), and now the legal department's (yep - a different set of "facts" that can be disproved). I hope that I'm dealing with a naive legal representative who believes the broker at his word, rather than real complicity and corruption.

I'll follow-up here again if/when I hear back from FINRA, etc.

Thanks again Tad and Elle for the great feedback!

-------------------------------------- Misc.invest.financial-plan is a moderated newsgroup where Moderators strive to keep the conversations on-topic for financial planning. Other posting guidelines include a request for brevity and another for trimming posts to which we respond. For all of the other tips and suggestions, see "FROM THE MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the Newsgroup.

Reply to
Poe

replying to Poe, joanofthejungle wrote: Interesting problem and very similar to what I am currently going through with an IRA transfer from Betterment to Vanguard. Betterment didn't liquidate my IRA on the day they told me, agreed to put a hold on the liquidation until I gave them the go-ahead, and then liquidated my account two weeks later without my knowledge or consent. This resulted in a loss of around $16,000. In your case, lying and screwing around with the dates both seem like fraudulent activity--they probably broke some IRS and/or SEC rules. Both agencies have complaint filing procedures. My brother talked to someone who works for an investment firm, and he mentioned these two agencies. It seems like the company would not have paid you off if they weren't in the wrong.

Reply to
joanofthejungle

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