Pension Firm Ordered to Cease Holding Cash

An Irvine pension administrator that oversees more than $700 million in retirement funds has agreed to abide by a Securities and Exchange Commission order prohibiting it from holding customers’ cash and securities, the agency said Wednesday.

Transcorp Pension Services Inc., without admitting any wrongdoing, agreed to “cease and desist” from acting as a broker-dealer or a custodian of assets unless it first obtains the necessary licenses, the agency said.

Transcorp violated federal laws, the SEC said, by holding as much as $16 million in customers’ securities and cash at its Irvine offices.

Company executives did not make themselves available for comment.

The administrative action against Transcorp is an outgrowth of the agency’s closer scrutiny of pension administrators in the wake of the 1994 First Pension Corp. scandal, said Lisa A. Gok, an SEC assistant regional director in Los Angeles.

Last fall, for instance, the agency filed a lawsuit accusing Qualified Pensions Inc. in Glendale and its president, Jerry G. Allison, of misappropriating $4.5 million in retirement funds and failing to register as brokers.

First Pension, an Irvine pension administrator, was a long-running Ponzi scheme that bilked clients of $136 million and led to long prison terms for its founder, William E. Cooper, and two cohorts.

Transcorp, however, has little in common with First Pension or Qualified Pensions.

“We didn’t find any fraud at Transcorp,” Gok said. “However, we found them not to be registered. That means that no one is doing any oversight of the company.”

That worried SEC officials because Transcorp, founded in 1982, handles more than $700 million in assets, including $70 million in cash, for about 30,000 self-directed individual retirement accounts and qualified retirement plans.

“There’s so much money involved in this area that these companies have become part of our regular enforcement program,” Gok said.

Typically, pension administrators don’t need licenses to handle such routine tasks as keeping track of clients’ investments and handling the paperwork for clients with self-directed IRAs, which allow beneficiaries to pick their investments.