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Investment Adviser Penalized $15M for Failing to Diversify
HR Daily AdvisorLink to more items from this source
Oct. 20, 2015
"A novel approach to determining damages owed by an investment adviser to two defined contribution retirement plans in an ERISA fiduciary-duty breach was part of a decision including a $15 million reimbursement request handed down recently by a New York federal judge.... WPN Corp., was ordered by the judge in part to pay $9.6 million to compensate for the amount the court determined plan holders at the former steel manufacturer, Severstal Wheeling, lost by following the firm's investment recommendations. WPN advised the Severstal Retirement Committee to invest the plans' $38 million assets in a narrowly concentrated basket of energy-sector stocks, and in 2009 liquidated the equities and proposed other high-risk investments." [Severstal Wheeling, Inc. v. WPN Corp., No. 10CV954 (S.D.N.Y. Aug. 10, 2015)]

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