Principal Financial Group of Des Moines has agreed to pay $5 million and adopt reforms to resolve allegations of paying millions in concealed compensation to brokers, State Attorney General Richard Blumenthal said.
Principal, a FORTUNE 500 company, will pay $4.4 million in restitution pension plan to customers across the nation who might have been harmed by the scheme. The company will also pay a $600,000 civil penalty to Connecticut.
Principal has paid roughly $3.2 million to a group of brokers, including BCG Terminal Funding Company, Brentwood Asset Advisors L.L.C., Dietrich and Associates Inc., Sharp Benefits Inc. and USI Consulting Group in Glastonbury.
According to Principal, the arrangements were “a means of adding some additional compensation without having to be completely up-front” with pension plan sponsors.
“This national settlement provides both significant restitution and sweeping reforms,” Blumenthal said.
Among the reforms made by Principal were detailed disclosures to consumers about compensation arrangements and a ban on concealed compensation to brokers.
“Principal promises its customers ”˜We’ll Give You an Edge,”™ but its hidden payments edged out competitors and harmed consumers,” Blumenthal said.
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