The Markets February 18, 2011

Asia Flows Advance in 2010

In 2010, local Asia long-term funds gathered $55 billion in net inflows, slightly higher than in 2009, according to Strategic Insight, an Asset International company.
Reported by

The company reported that equity funds suffered outflows of $1.6 billion in December and $25.9 billion for the year. Meanwhile, bond funds took in $4.8 billion over the month and $76.6 billion during the year.

Funds in the mixed category gave up $2.4 billion in December and $12.5 billion in the 12-month period. Overall, Strategic Insight said the local Asia funds were flat in terms of flows in December, but took in $25.1 billion during the year. For Asia funds without Japan, the funds lost $4.6 billion in December and $43.9 billion over the year.

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Compliance February 18, 2011

Final Settlement of Ford Stock-Drop Suit Reached

After five years of litigation, a judge gave final approval to a settlement of a suit accusing Ford Motor Co. of continuing to offer company stock in its 401(k) plan when it was no longer prudent to do so.
Reported by

The U.S. District Court for the Eastern District of Michigan ordered Ford to pay nearly $1.5 million in attorneys’ fees and costs. However, the settlement called for non-monetary concessions for plan participants. Ford will provide free financial advice for four years to hourly and salaried retirees and employees who invested in Ford stock since April 2000 (see “Ford Settles Company Stock Suit with Advice“).  

The company will also warn plan participants whose investments in Ford stock exceed 20% of their total plan holdings that they may want to consider diversifying. Ford also agreed that if it provides a company match to retirement plans during the next three years, the contribution will come in cash, not Ford stock as it has done in the past.  

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According to BNA, other provisions of the settlement include: 

  • Fiduciary training for plan fiduciaries at least once a year for four years
  • Enhanced communications with plan participants describing the importance of diversification
  • During the three-year period following approval of the settlement, when matching contributions are made, participants will first get a chance to select their investments, but if no investments are selected, then the match will be invested in a qualified default investment alternative, which is currently a target date retirement fund. 

The case is In re Ford Motor Co. ERISA Litigation, E.D. Mich., No. 06-cv-11718.

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