NEW YORK, NY / Huffington Post / The Watchdog / June 14, 2011
By Marcus Baram
Unbeknownst to her, Young was actually talking to a sales agent at a subsidiary of Principal. She felt deceived and sued Principal along with other plan participants, alleging that the company "failed to act solely in the interests of the participants and their plans and instead engaged in blatant and massive self-dealing."
Essentially, the case asked a simple question: Is it too much to ask of professionals who give investment advice to retirement plan participants to have the best interests of those retirees in mind?
In a decision that reverberated through the universe of retirement professionals and their clients, Young's case was dismissed. Principal felt vindicated, stating at the time that it makes "every effort to ensure our business conduct fully satisfies our high ethical standards." The decision, along with many other cases in which it proved difficult to hold investment advisers accountable for allegedly self-serving advice, helped convince the Labor Department to make some changes.
The resulting proposal, which broadens the definition of a fiduciary -- a person bound to look out for another's interest -- has sparked a fierce lobbying battle in Washington, D.C., largely under the radar of the media.
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