Products March 11, 2009

WMSI, Keane Offer Plan Windup Service

Keane Retirement Services announced it is partnering with rollover provider Wealth Management Systems Inc. (WMSI) to offer an automated service for plan terminations and missing participant resolution.
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A news release from the Wayne, Pennsylvania-based Keane said that through the new offering, plan sponsors terminating plans can reconnect with as many missing participants as possible and then roll over participant accounts into IRAs for missing participants as necessary.

According to the release, sponsors who are interested in this new solution adopt an automated safe harbor IRA rollover process as a plan provision. Applicable participants are then notified, and in the cases where an alternative investment decision is not selected, Keane works with WMSI to open an IRA on the participant’s behalf.

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WMSI gives customers access to a variety of IRA providers, reduces administrative costs, provides paperless transaction processing, and gives TPAs and plan sponsors fund activity reports.

“The agreement between WMSI and Keane is an important step forward in providing a comprehensive plan termination process for plan sponsors,” said John Geli, WMSI CEO, in the release.

Fellow rollover service provider RolloverSystems Inc. announced in mid-January that it had published a “best practices” guide for plan sponsors who are contemplating a 401(k) plan termination (see “RSI Publishes Guide for Plans Looking for an Exit Strategy’).

Compliance March 11, 2009

Securities Class Action Settlements Lower in 2008

The value and number of federal securities class action settlements declined in 2008, according to a report by Cornerstone Research.
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According to Securities Class Action Settlements: 2008 Review and Analysis, the annual settlement value fell by slightly more than 50%, from $62.7 million in 2007 to $31.2 million in 2008. The number of settlements decreased to 99 in 2008 from 110 in 2007.

In a press release, Cornerstone said the sharp drop can be attributed to the decline in multi-billion dollar settlements. No “mega settlement” of more than $1 billion was made in 2008.

Institutional investors served as lead plaintiffs in more than 60% of cases in 2008. Cases involving public pensions as lead plaintiffs are associated with significantly higher settlements, according to the press release.

The median amount of cases settled in 2008 was $8 million, compared to $9 million in 2007, which was an all-time high for all cases settled between 1996 through 2007, according to Cornerstone.

Cornerstone analysts said the decline is unlikely to be a trend in upcoming years. “Settlement figures may well bounce back over the next few years as cases associated with potentially large damages related to the current financial collapse work their way through the judicial system,” said Joseph Grundfest, director of the Stanford Law School Securities Class Action Clearinghouse and co-author of the report, in the press release.

Cornerstone also found the average length of a class period in 2008 reached a new high of more than 800 days—nearly a year longer than the average for all settlements through 2007. The average class period before 2008 was 518 days.

The full report is here.

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