Deals & People February 20, 2009

401(k) Education Provider Cuts Back

A slumping economy with fewer hires has led to cutbacks at a leading 401(k) education provider.
Reported by
Newkirk Products Inc., which produces educational materials for 401(k) programs, has cut 10% of the staff at its Albany, New York headquarters.
According to the Albany Times Union, the company has reduced the pay of its top employees, in addition to the elimination of 30 jobs. The report cites Ray Newkirk, who founded the firm in 1972 with his brother Pete, noting that because fewer companies are hiring, there is a drop in demand for brochures and educational materials for new employees who become eligible for 401(k) plans.
Pay cuts were also given to employees who make more than $50,000, with the highest earnings receiving the largest cuts on a sliding scale, according to the Times Union.
The report notes that Newkirk now employs 270 people at its Albany offices, with 330 employees all told, when offices in Portland, Oregon, Butler, New Jersey (McKay Hochman Co., Inc.), and Minneapolis, Minnesota (MasteryPOINT Financial Technologies) are included.
Newkirk and his brother are majority shareholders of the privately held company and about 30 employees have small stakes in the firm, according to the report.
Employees were told of the job cuts, which were effective immediately, on February 12. The Times Union notes that those who lost their jobs were given severance packages and job placement assistance.
Compliance February 20, 2009

AirTran 401(k) Seeks Assurances on Stanford Group Tie

Stanford Group Cos., the investment house run by disgraced billionaire R. Allen Stanford, has served as the financial advisor to AirTran Airways Corp.’s 401(k) plan – but participants don’t need to worry.
Reported by
According to the Atlanta Business Journal, AirTran, which used a director for Stanford Group Cos. as its 401(k) plan adviser, said its employees’ retirement plans are not in any danger. “There’s no exposure in any way,’ airline spokesman Tad Hutcheson told the paper.
The Houston-based investment advisory firm was accused of running a “massive and ongoing’ fraud, according to an emergency complaint filed February 16 by the Securities and Exchange Commission to halt the firm’s operations (see Another Billion-Dollar Investment Advisory Fraud Unfolds) .
The SEC’s complaint alleges the company misled investors to buy certificates of deposit and other products by misstating investment returns. “Stanford Financial Group is the investment advisor to the 401(k) plan,’ Hutcheson told the ABJ. However, “It does not manage or hold any of the money’ in the employee 401(k) plan, he said.
“I want you to know that none of the AirTran pilots’ retirement money is in any of the Stanford off shore accounts,’ Ron Burkhart, the president of the AirTran pilots union wrote to his fellow pilots, according to the report, “Our advisor is employed by a different subsidiary of the Stanford Group. Our accounts are with Fidelity as the bookkeeper and the different fund choices we have do not include any Stanford funds.’
The adviser, Stanford Group Company of Atlanta, Georgia, provides guidance to AirTran employees regarding about two-dozen Fidelity-branded or managed mutual funds offered in the airline’s 401(k) program.
“We have been assured by Fidelity that there are no Stanford-related investment products involved in the mutual funds our employees are invested in,’ Hutcheson said, adding the airline is “carefully monitoring’ the situation.

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