Conflicts of Interest with son as investment advisor

[dmwe]

This has probably been asked before but if a Company President directs the handling of the company retirement plan to his son who's the investment advisor with a national investment provider and receiving compensation, would this constitute a conflict of interest or prohibited transaction?

[My 2 cents]

Not an expert to be relied upon, but it seems to me that there could be issues involving

• Prohibited transaction - might be.  Is the son, who does not work for the sponsoring company, considered to be a party in interest? 
• Failure of the company president to discharge his duties prudently and according to fiduciary standards.  Under what reasonable process did the president reach the conclusion that his son should handle the plan's investments?
• While it might constitute a conflict of interest, is that something that ERISA and applicable regulations address?  Would the son be working under a conflict of interest, or is the concern here that the father would be?  I suspect that the father is aware of any conflict of interest that the son might have (it should not be necessary for the son to inform the president that he, the investment advisor, happens to be the president's son).  If the father is operating under a conflict of interest, how could it be cured?  The biggest problem here with respect to conflict of interest could involve questions as to whether the president is choosing an investment advisor prudently and in accordance with the fiduciary standards.

[jpod]

This is quite likely a 406(b) pt whether or not the son is a p-i-i.