Principal Life Insurance Company
Tracking Number: 20241005-0002
Subject: Financial Misrepresentation by Principal Life Insurance Company (2008-2013)
Submitted By: Dennis R. Myhre, AIC
Date: October 5, 2024 (Original Submission)
Affected Parties: 401(k) Plan Investors in Principal U.S. Property Separate Account (PUSPSA)
1. Summary of Allegations This report details concerns regarding Principal Real Estate Investors’ acquisition practices and fiduciary misconduct. Specifically, the 2006 acquisition of 333 Market Street in San Francisco—arranged through Eastdil Secured, a Wells Fargo subsidiary—raises serious conflicts of interest and potential violations of fiduciary duties.
2. Key Findings & Evidence
- In 2007, 97.5% of Principal U.S. Property Separate Account’s real estate transactions were conducted off-market through private deals, repeat sellers, or lender-involved transactions.
- Principal allegedly engaged in off-balance sheet accounting and shadow banking, raising concerns over transparency.
- Principal Financial Services allegedly failed to act in the best interest of investors, violating fiduciary responsibilities.
3. Legal Violations & Fiduciary Concerns
- ERISA (Employee Retirement Income Security Act) Violations: Potential mismanagement of 401(k) investments.
- Securities Fraud: Possible misleading statements to investors regarding asset valuations and acquisition practices.
- Conflict of Interest: Transactions involving Wells Fargo raise concerns over self-dealing and preferential treatment.
4. Recommended Actions
- Investigation into Principal Financial Services’ real estate acquisitions and accounting practices.
- Audit of fiduciary disclosures and investment agreements related to 401(k) services.
- Legal review of transactions involving Wells Fargo and Eastdil Secured to identify regulatory violations.
