According to published reports, 403(b) sales practices at Valic are under scrutiny by the Securities and Exchange Commission.
Citing people briefed on the matter, the Wall Street Journal reports (subscription required) that the SEC is investigating sales and disclosure practices at Valic, including the company’s dealings with retirement-plan participants at school districts and universities.
Citing those same individuals, the Journal says the inquiry centers on whether incentives in Valic’s compensation structure rewarded representatives for selling higher-cost products to retirement plan participants and whether Valic materials and representatives properly disclose the payments its representative receive on certain product sales. The report also says that the SEC is looking at Valic’s arrangements with school districts, in which it provides money to cover certain school expenses while also offering investment advice and products to school employees.
The report goes on to cite comments from those people that in recent weeks, several high-level Valic executives have been placed on administrative leave.
The report says that a spokesman for Valic said: “We cannot comment at this time on any regulatory inquiries or related personnel matters. It is our policy to cooperate fully with all regulatory inquiries and to take steps to ensure compliance with the law and best practices.”
Earlier this month, the Journal reported (subscription required) that the SEC had sent letters to companies that administer the plans seeking information that will help the agency determine whether violations have occurred. The Journal reports that the SEC wants detailed information on how those TPAs select investment options and how they handle situations in which there may be a conflict of interest.
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