Morgan Keegan and Co. Inc. has agreed to pay $633,715 to 10 pension plans covered by the Employee Retirement Income Security Act. The agreement was in response to an investigation by the U.S. Department of Labor's Employee Benefits Security Administration that found the full-service brokerage company violated federal law when it recommended certain hedge funds of funds as investments to its ERISA-covered employee benefit plan clients. These recommendations resulted in the hedge funds of funds paying Morgan Keegan revenue-sharing and other fees.

Under terms of the settlement, the brokerage firm has agreed to disclose to its ERISA plan clients whether the company will act as a fiduciary to those plans. If it does act as a fiduciary, it will specify the services that it is providing as a fiduciary. It also will provide to its ERISA plan clients a description of all compensation and fees received, in any form, from any source, involving any investment or transaction related to them. The company either will not collect commissions or, if it does collect them, refund to its ERISA plan clients 100 percent of the amount collected from third parties.

"The law is very clear: If you accept a fee to give investment advice to a retirement plan, you are a fiduciary and must therefore act solely in the best interests of the participants in that plan," said Phyllis C. Borzi, assistant secretary of labor for employee benefits security in a statement. "Third-party payments should never be the motivating factor behind which investments brokers and advisors steer retirement clients into."