SEC Announces $97 Million Enforcement Action against TIAA Subsidiary

July 13, 2021 – The Securities and Exchange Commission (“SEC”) announced that TIAA-CREF Individual and Institutional Services LLC (“TC Services” or the “Firm”) will pay $97 million to affected investors for violations related to retirement rollover recommendations. The charges related to the settlement include inaccurate and misleading statements and a failure to adequately disclose conflicts of interest to participants of the TIAA employer-sponsored retirement plan (“ESP”).

Pursuant to the release, “According to the SEC’s order, from January 1, 2013, through March 30, 2018, the Firm and its Wealth Management Advisers (WMAs) did not adequately disclose the full nature and extent of their conflicts of interest in recommending to clients that they roll over their retirement assets into a managed account program called “Portfolio Advisor.” ”

The Firm did not adequately disclose compensation practices and financial incentives to clients. The Firm trained its WMAs to make representations that they offered “objective,” “non-commissioned” advice, “put the client first” and acted in the client’s best interest. This was misleading, as the incentives offered by the Firm to the WMAs undercut their non-objective advice. Additionally, the Firm did not ensure that recommendations were in the best interest of the client. WMAs were pressured by the Firm to prioritize the rollover of ESP assets into “Portfolio Advisor” instead of lower cost alternatives. The order also noted that the Firm failed to adopt and implement written policies and procedures to prevent violations of the Investment Advisers Act related to rollover recommendations.

Comments from Melissa Hodgman (Acting Director of the SEC Enforcement Division) and Adam S. Aderton (Co-Chief of the SEC Enforcement Division’s Asset Management Unit) emphasized that advisers acting in a fiduciary capacity need to provide their clients with complete and accurate disclosure of conflicts of interest.

To read the full news release from the SEC click here.