Company Fined for Failure to Provide Plan Documents

The US District Court for the Eastern District of Michigan has ruled that a plan administrator must pay a former employee $10,500 for failing to provide her with pension plan documents she requested.

According to the opinion, the court fined Michigan Consolidated Gas Co.’s pension plan administrator Elizabeth Pochini $100 per day, as required by the Employee Retirement Income Security Act (ERISA), from March 17, 2004, when the company was served with Diane Zirnhelt’s lawsuit, until July 1, 2004, when the requested documents were provided to Zirnhelt’s attorney.

ERISA requires a plan administrator to respond within 30 days to a request for information from a plan participant or beneficiary.

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Pochini argued that she failed to provide the documents requested by fax on May 2, 2003, after Zirnhelt’s attorney confirmed that he had been advised Zirnhelt was not entitled to benefits under the plan, thinking the request for documents was moot at that point. However, the court opinion stated that the defendants conceded that Zirnhelt only needed to have a “colorable claim” to benefits to rightfully request plan documents, and not a successful claim for benefits.

Zirnhelt filed a lawsuit on February 19, 2004 claiming she was entitled to benefits under the company’s pension plan and claiming the plan’s vesting requirements violated ERISA. She also requested in her lawsuit penalties beginning on June 1, 2003 for failing to provide her with plan documents she requested.

The court granted summary judgment to the company on the first two claims since the plan document in effect at the time of Zirnhelt’s termination required 10 years of service to vest and excluded years before a participant attained age 22. The court said Zirnhelt conceded that she was not entitled to benefits based on that provision and that the vesting requirement was not in violation of ERISA minimums.

The court began the penalty period at the time the lawsuit was served, rather than 30 days after the initial request, saying the ultimate outcome of her lawsuit was not affected by the delay.

The case is Zirnhelt v. Michigan Consolidated Gas Co., E.D. Mich., No. 04-CV-70619, 11/1/06.

BISYS Reveals Proposed $25.1M SEC Deal on Financial Restatements

The BISYS Group announced Friday that it and staff members of the US Securities and Exchange Commission (SEC) have hammered out a $25.1 million agreement in principle over the SEC investigation into company financial restatements in 2004 and 2006.

A news release from BISYS, already the target of a settled SEC fund payment inquiry, said the SEC staff has agreed to recommend the commission approve the latest deal. The news release said the deal – which calls for the $25.1 million disgorgement and interest payment – must also be approved by a federal judge to which the SEC would file a complaint and the simultaneous settlement.

The announcement gave few details but indicated that the probe had centered around restatement of financial results on August 10, 2004 and April 26, 2006

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Under the terms of the proposed deal, BISYS said it has agreed not to further violate “the reporting, books and records and internal controls provisions of the federal securities laws and related SEC rules.”

“We have been cooperating fully with the SEC staff throughout the course of their investigation and are pleased to have reached this proposed settlement. As an organization, we are committed to holding ourselves to the highest ethical standards,” said Robert Casale, chairman, and interim CEO and president of BISYS, in the news release. “We believe that this settlement is in the best interest of BISYS and its shareholders and will allow the company to continue to focus on growing its businesses and pursuing opportunities to maximize shareholder value.”

BISYS said it now estimates that its fiscal year 2006 Form 10-K will be filed in early December 2006. Bruce Dalziel, chief financial officer of BISYS, noted, “Management and the Board have made a concerted effort to enhance financial controls throughout the organization. We are still catching up onour Sarbanes-Oxley and audit efforts for fiscal year 2006, with an emphasis on quality rather than speed. We appreciate our investors’ patience as we seek to establish a world class control environment at BISYS.”

The earlier BISYS fund payment probe centered on whether it used mutual fund fees to pay for the marketing and distribution of the funds. The investigation was closed with a charge of aiding and abetting. The SEC is conducting a wider probe of whether independent contractors paid rebates to mutual-fund companies in an effort to snag contracts for jobs such as producing shareholder reports and prospectuses.

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