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Boston, Massachusetts - The U.S. Department of
Labor has sued Circle Trust Company (CTC) of Darien, Connecticut, to
restore millions of dollars in losses on imprudent and risky investments
with the Trust Advisors Stable Value Plus Fund (SVF), a collective trust
administered by CTC. Circle Trust serves as a trustee to SVF, which had
invested approximately $200 million from 1,500 pension plans nationwide.
“The company’s actions have jeopardized millions of
dollars in workers retirement benefits,” said U.S. Secretary of Labor
Elaine L. Chao. "The department is aggressively seeking to recover
these assets for workers and their families.”
Trust Advisors, LLC, of Westport, Connecticut, was the
investment advisor to the SVF from March 1998 through October 31, 2003.
The Labor Department’s suit alleges that, from July 1999 through the
present, CTC violated the Employee Retirement Income Security Act (ERISA)
by, among other things, causing SVF to invest in a number of speculative
and imprudent investments that resulted in millions of dollars in losses
to the trust fund. The investments were based on the recommendations of
Trust Advisors. On September 30, an independent fiduciary appointed on
behalf of SVF filed a petition seeking bankruptcy protection for the SVF.
On the same day, the Connecticut Banking Commissioner was appointed as the
receiver of CTC.
The Labor Department suit, filed in the U.S. District
Court for the District of Connecticut, seeks to permanently bar CTC from
serving as a fiduciary to any employee benefit plan covered by ERISA. The
suit also asks the court to order CTC to reimburse SVF for all losses,
with interest, resulting from its fiduciary breaches.
The Labor Department’s legal action resulted from an
investigation conducted by the Boston regional office of the department’s
Employee Benefits Security Administration (EBSA). In fiscal year 2004,
EBSA achieved record monetary results of $3.1 billion related to the
pension, 401(k), health and other benefits of millions of American workers
and their families. Employers and workers can contact the Boston regional
office at 617.565.9600 or EBSA’s toll-free number, 1.866.444.EBSA
(3272), for more information on the requirements of ERISA or for help with
problems relating to private-sector pension and health plans. Additional
information can be found at www.dol.gov/ebsa.
(Chao v Circle Trust Company)
Civil Action Number: 3:05-CV-01679-JCH |
