Dan Puplava, Deferred Compensation Manager of the San Diego County Office of Education's Fringe Benefit Consortium 403(b) and 457(b) plan evidently has been earning commissions from product sales to employees and participants of San Diego County (as well as Riverside and Imperial Counties). According to the San Diego Union Tribune article "In 2006, Puplava collected at least $355,000 in commissions as a broker for AIG Financial Advisors Inc., according to documents obtained by The San Diego Union-Tribune. He was named to the 2008 Achiever's Council, an honor reserved for agents of AIG Financial Advisors whose commissions and fees exceed $250,000 a year."
This is an interesting article and a case that warrants further attention from participants and authorities.
"Puplava's work as a broker also appears to have been done at county offices. Client statements obtained by the Union-Tribune list Puplava's phone number at the county schools office as his primary contact.
“It certainly strikes me as an apparent conflict of interest,” said Ronald F. Duska, director of the Mitchell Center for Ethical Leadership at The American College in Bryn Mawr, Pa. “It just sets up incredible temptations for the guy who's supposed to be acting as a manager.”
The conflicts of interest that exist when a fiduciary of a plan is also selling products are huge and its clear that this should be examined further. The article states "The arrangement does not appear to violate federal securities laws, but it tests the limits of the state education code and has become one of the main sticking points in litigation involving the office."
The article goes on to say "Running an outside business is legal for full-time county Office of Education employees. But according to the California Department of Justice, a deferred compensation program manager is supposed to be a neutral party – not someone who profits from marketing financial products.
“The statute prohibits school employees from acting as sales agents for 403(b) vendors in return for commissions,” according to an August opinion from the Attorney General's Office analyzing the state's education code."
The reporter found documents linking AVIVA (a purveyor of fixed annuities for 403(b) plans) commissions with Puplava as well:
"Court papers also say Puplava negotiated a deal with Aviva Life and Annuity Co. that paid him 30 percent of all commissions the partnership received from Aviva. In 2006, Puplava personally collected more than $26,000 in Aviva commissions from February to October, the cross-suit says."
Puplava denies wrongdoing but has refused to go on the record, this blog has invited him to refute in writing any and all allegations against him. We have extended an offer to allow him to submit his rebuttal in writing and we will not edit it.
Puplava has also had his attorney send this blog (and its editor) a threatening letter to remove all links to the San Diego Union Tribune article. Click on the link above to be taken to the article.
Scott Dauenhauer CFP, MSFP, AIF