Follow-Up re: Formally Complaining About Bungled 401K Rollover Request
Poe
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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Elle
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.
Tad Borek
> 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.
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 www.sec.gov) 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
Poe
> 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.
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.
Elle
> What higher authority would you recommend reporting this
> to?
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.
> I did, in parallel to my other activities, submit a
> complaint to cfp.net.
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.
Tad Borek
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
Don
> 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.
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.
kastnna
> Poe wrote:
> > I did, in
> > parallel to my other activities, submit a complaint to cfp.net.
>
> 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.
>
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:
https://apps.finra.org/Investor_Information/Complaints/complaintCenter.asp
I recommend reading: http://www.finra.org/web/groups/inv_info/documents/investor_information/p011944.pdf
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
Poe
> Poe wrote:
>> I did, in parallel to my other activities, submit a complaint to cfp.net.
>
> 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.
>
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!
joanofthejungle
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.
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