Investment advisor restores more than $340,000 to benefit plans after US Department of Labor finds pension rule violations [04/14/2014]

EBSA News Release: [04/14/2014]
Contact Name: Scott Allen or Rhonda Burke

Phone Number: (312) 353-6976

Release Number: 14-0628-KAN

Investment advisor restores more than $340,000 to benefit plans

after US Department of Labor finds pension rule violations

Iowa-based advisor received undisclosed commissions and fees

JOHNSTON, Iowa — Iowa-based investment advisor Donald Gene DeWaay Jr. has paid $341,487 to 68 pension plans covered by the Employee Retirement Income Security Act. The payments were made as part of a settlement agreement following an investigation by the U.S. Department of Labor’s Employee Benefits Security Administration. The investigation found that DeWaay, entities he owns and former employees violated federal law when they recommended certain investments to clients participating in ERISA-covered employee benefit plans between May 2007 and November 2011. EBSA investigators also found that DeWaay’s companies and advisors charged higher fees than those agreed to by their clients. Recommendations made to clients also resulted in DeWaay, his companies and former employees receiving commissions from third parties. DeWaay has also agreed to pay up to an additional $212,727 over the next five years to other ERISA plans he managed.

“The law clearly states that an advisor who accepts a fee to give investment advice to a retirement plan must act solely in the best interests of plan participants,” said Assistant Secretary of Labor for Employee Benefits Security Phyllis C. Borzi. “By ignoring the best interests of those participants, the defendants in this case didn’t simply violate the law; they violated the faith of conscientious workers who trusted DeWaay and his employees to help them prepare for a secure retirement.”

DeWaay owns or owned three companies based in Johnston: DeWaay Capital Management Inc., an investment advisory firm; DeWaay Benefit Administrators LLC, an employee benefit plan administrator and DeWaay Financial Network LLC, a now defunct full-service brokerage company.

Under the terms of the settlement, DeWaay and four investment advisors he employed Joshua Cross, Paul Espey, Andrew Kleis and Brenton Collins, have agreed moving forward to disclose to ERISA plan clients whether they will act as fiduciaries to those plans. The investment advisors and companies will also provide their ERISA plan clients a description of all compensation and fees received, in any form, from any source, involving any investment or transaction related to them. They have also agreed that either they will not collect commissions from third parties or, if they do, will refund 100 percent to their ERISA plans clients. DeWaay also agreed to be removed as trustee of the DeWaay and Associates Inc. 401(k) Profit Sharing Plan, and to no longer serve or act as a fiduciary or service provider to the plan.

The investigation was conducted by EBSA’s Kansas City Regional Office as part of the agency’s Fiduciary Service Provider Compensation Project. The project focuses on the receipt of improper or undisclosed compensation by employee benefit plan consultants and other investment advisers. The settlement was reached with the assistance of the Office of the Solicitor in Kansas City and the Division of Plan Benefits Security.

Employers and workers can contact EBSA’s Kansas City office at 816-285-1800 or toll-free at 866-444-3272 for help with problems relating to private sector retirement and health plans. For more information, visit

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