Compliance October 6, 2011

BNY Mellon Focus of ERISA Investigation

Having drawn the scrutiny of regulators, Bank of New York Mellon now finds itself the target of another investigation.
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The New York-based law firm of Harwood Feffer LLP said that it is “investigating possible violations of the Employee Retirement Income Security Act of 1974 (“ERISA”) by the Bank of New York Mellon Corporation (“BNY”) (NYSE: BK) and certain of its officers, directors, and employees”.  

Specifically, Harwood Feffer says it is investigating whether certain fiduciaries of the Bank of New York Mellon Corporation 401(k) Savings Plan may have breached their fiduciary duties under ERISA to the plan and its participants and beneficiaries by continuing to invest the plan’s assets in BNY common stock when it was no longer prudent to do so.  

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The law firm cited the October 4 announcement that New York Attorney General Eric Schniederman and United States Attorney for the Southern District of New York Preet Bharara had filed separate lawsuits against BNY accusing it of overcharging state and other pension funds on foreign exchange fees and defrauding customers in the foreign exchange markets (see “BNY Mellon Sued by U.S. and NY“).  The New York Times reported that Attorney General Schneiderman is seeking approximately $2 billion from BNY while U.S. Attorney Bharara is seeking “hundreds of millions of dollars” in connection with the wrongdoing, according to Harwood Feffer. 

The law firm also noted that since July 2011, BNY has additionally been sued by the Attorneys General of Florida and Virginia as well as at least one pension plan for the same conduct. “Investigations have been opened in several other states as well as by the Securities and Exchange Commission and the Department of Justice. During the same period, the share price of BNY common stock has fallen approximately 30%,” it noted.  

A BNY Mellon spokesperson noted that “BNY Mellon contracts with an independent fiduciary to make all decisions regarding whether the company’s common stock should be an investment option in the savings plan.”

More information about the investigation is available at http://www.hfesq.com. 

Data & Research October 6, 2011

Declining Retirement Confidence Transcends Political Affiliation

Bill McInturff, a partner at polling firm Public Opinion Strategies, told a group of reporters that it is upsetting and unsettling to see that a lack of confidence in retirement savings has permeated throughout every economic class.   
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McInturff said there are usually large differences in confidence levels depending on economic status. “Normally, if you have a lot of money, you’re not concerned. Now, across the board, everyone is concerned. It’s not like I’ve seen in the past; it speaks to how difficult these past four years have been since the recession started in ‘08.”

McInturff was referring to results from a national survey released this week, conducted by Lake Research Partners and Public Opinion Strategies, and commissioned by Americans for Secure Retirement (ASR), a broad-based coalition of more than 70 organizations committed to raising awareness of policy issues related to retirement security.

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The survey reveals that anxiety about retirement is continuing to grow, with near universal concern about having enough to make ends meet throughout retirement.  

“What we’re seeing is significant, and increasing, concern from Americans of all political stripes about falling short financially during retirement,” said McInturff. “Not only are Americans concerned about their own financial health, but they also express widespread concern over how the continued contentious debate in Washington could further undermine what they are planning for in retirement. Even those who feel we must make dramatic cuts to deal with the debt think Congress needs to identify concrete ways to help Americans deal with further retirement instability.”

The survey reveals pervasive anxiety over how efforts to reduce our national debt may impact retirement security. Regardless of party affiliation, the majority of voters are concerned that cuts to Medicare or Social Security would have too significant an impact on retirement or that, if cuts are made, Congress must look for other ways to help Americans better plan for retirement. A majority of respondents also expressed support for proposals such as tax incentives to help save for retirement.

Key findings from the survey include:

  • Eighty-eight percent of voters expressed concern about "being able to maintain a comfortable standard of living throughout retirement," with 52% of those individuals indicating they are "very concerned." This is up 15% from just last year.
  • Concerns aboutbeing able tomaintain a standard of living in retirementare extremely high across very diverse demographic groups:
    • White (86%)
    • African-American (88%)
    • Hispanic (96%)
    • Those without any investments (93%)
    • Those with over $100,000 in investments (84%)
    • Financial elites (81%)
    • Retired (81%)
    • Not-retired (89%)
  • A third (31%) of all voters believe that if policymakers are going to cut Medicare or Social Security, they must looks for additional ways to help Americans better prepare for retirement.
  • Half (50%) of voters believe lawmakers should not cut Medicare or Social Security because it would have too significant an impact on retirement. Interestingly, this concern does not strictly fall along party lines. A plurality of Republicans and Tea Party supporters (34% of self-identified Tea Party supporters, 39% of Republicans) and the majority of Democrats (62% ) express this viewpoint.
  • Eighty-eight percent of voters view tax incentives to help save for retirement as important. This includes 81% of Tea Party supporters, 83% of Republicans, 86% of Independents and 94% of Democrats.

"Continued economic uncertainty, high unemployment and instability in the stock market have placed a growing concern on retirement security, and it's an issue that transcends party affiliation," said Celinda Lake, President of Lake Research Partners.  "As all eyes turn toward the 2012 election cycle, it's clear that fears regarding retirement security will play out big not only for Democratic voters, but even the most conservative of Republicans as well."

The poll was conducted by Public Opinion Strategies, in consultation with Lake Research Partners, as part of a national survey of 800 registered voters.  The survey took place from September 10-13, 2011.  More information, including a detailed breakdown of the poll results, can be found here.   

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