Agency Audits Trading by Pension Funds

The Labor Department is investigating possible trading abuses by pension fund administrators who control assets totaling $1.1 trillion in mutual funds and similar pooled investments.

The department’s Employee Benefit Security Administration, which oversees the operation of pension funds, is auditing a sample of mutual fund affiliates to see whether improper rapid trading or illegal late trading in mutual fund shares may have harmed pension plan beneficiaries.

“We’re looking at whether they’ve accepted improper payments for directed investments, whether they used pension accounts to facilitate market timing or late trading for other clients,” Ann Combs, the office’s assistant secretary, said in an interview Monday.

The review of pension fund investments is a new part of the state and federal investigation of trading abuses in the mutual fund industry.

The Labor Department’s audits will try to determine whether mutual fund affiliates or banks that help administer retirement plans used the plans for personal gain, Combs said.

She declined to say which fund companies are being examined, and said the investigation is exploratory, not the result of evidence that administrators have engaged in improper trading activity.