Products January 29, 2009

New Firm Offers 401(k) Education

A new firm has formed with the goal of educating employees about their 401(k) retirement plans.
Reported by

According to a press release, the 401KTrainers.com team is composed of investment advisers who not only offer training, but also are licensed financial advisers who can provide the information and education necessary for employees to make educated decision about their investments. “Our goal is to educate employees about their plans so they can navigate their investments and reach desired goals,” said Emile De Boyrie, company founder, president and CEO, in a press release.

The team reviews an organization’s current 401(k) plan and investment options and prepares a 45-minute training session for employees. The training covers financial market updates, investment choices available in the company’s 401(k) plan, and general education about asset allocation.

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Training sessions are held at times and locations requested by the employer and are currently available in English, Spanish, and Portuguese. The education will be available in Creole soon.

For more information about Coral Gables, Florida-based 401K Trainers, visit

For more information about Coral Gables, Florida-based 401K Trainers, visit www.401KTrainers.com or call 305.443.1705.

 

Compliance January 29, 2009

Minn. Firm Slaps State Street with Subprime Suit

State Street has been hit with another federal court lawsuit alleging it took positions in risky subprime mortgage-backed securities in its Daily Bond Market fund, without telling anyone it had done so.
Reported by

Apogee Enterprises, a Minneapolis-based glassware manufacturer, charged that the investment decisions State Street made regarding the bond fund represented breaches of State Street’s fiduciary duties under the Employee Retirement Income Security Act (ERISA) that ended up costing its 401(k) plan more than $5 million.

According to the suit, State Street touted the Daily Bond Market Fund as a conservative, stable, risk-controlled, well-diversified option for Apogee’s 401(k) plan, but changed the fund’s strategy during 2006 to take on significantly more risk. Apogee alleged that State Street applied leverage in making the investments in subprime mortgage-backed securities, which had the effect of adding greater risk to the fund.

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State Street misled Apogee about how long it would take for Apogee’s 401(k) to get out of the Daily Bond Market Fund, the company charged. State Street allegedly told Apogee that it would take 60 to 90 days when, in fact, other plan sponsors were able to get out of the fund with 48 hours notice.

The suit said Apogee hired State Street in 1999 as trustee, administrative services provider, and investment manager. Eventually, both State Street and CitiStreet performed services for the Apogee plan.

According to the complaint, 27.29% of the Daily Bond Market Fund’s assets were invested in mortgage-backed securities as of July 31, 2007. From January 1, 2007, to August 24, 2007, the Daily Bond Market Fund lost 20.86% of its value.

Apogee estimates that the fund lost approximately 12.5% of its value between August 9, 2007, when it asked to withdraw from the fund, and August 30, 2007, when it was finally allowed to exit the fund.

The case is Apogee Enterprises Inc. v. State Street Bank and Trust Co., D. Minn., No. 09-cv-00170-DSD-FLN.

A Massachusetts plumbing and air conditioning supply company sued State Street in August over similar allegations (see “State Street Sued over Mortgage-Backed Investments’).

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