Compliance December 6, 2013

Court Appoints Fiduciary for 401(k) Plan

A federal court order appointed an independent fiduciary for a Holtsville, New York retirement plan.
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The order comes after the Department of Labor (DOL) filed a lawsuit, Harris v. Windswept Environmental 401(k) Plan (civil action number: 2:12-cv-06179-JS-WDW), in the U.S. District Court for the Eastern District of New York. The suit petitioned the court to appoint an independent fiduciary to administer the plan and distribute assets to participants and beneficiaries, following the death of the plan’s sole fiduciary.

The order from the federal district court appoints M. Larry Lefoldt as an independent fiduciary to manage the 401(k) plan of the defunct Windswept Environmental Group Inc.

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The 401(k) plan was established in May 2001. The plan’s administrator, trustee and sole fiduciary, Michael O’Reily, died in November 2008, and Windswept Environmental ceased operations in February 2009. As a result, no one was administering the 401(k) plan, and certain former employees of the company did not receive a distribution of their promised benefits.

Under the Employee Retirement Income Security Act (ERISA), plans must be managed by fiduciaries. In the absence of a plan fiduciary, participants and beneficiaries may not be able to obtain plan information, make investments or collect retirement benefits. In this case, the plan has 12 participants and more than $129,000 in assets.

The lawsuit resulted from an investigation conducted by DOL’s Employee Benefits Security Administration (EBSA).

Products December 6, 2013

MFS Launches Low-Volatility Funds

Asset management firm MFS launched two mutual funds designed to provide equity exposure with less overall volatility.
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Dubbed the MFS Low Volatility Equity Fund and the MFS Low Volatility Global Equity Fund, the investment products seek capital appreciation with reduced volatility relative to their respective benchmarks—the S&P 500 Index and the MSCI All Country World Index, respectively.

According to a statement from MFS, fund managers will invest in stocks that are attractive from both fundamental and quantitative perspectives. Investment decisions will rely on the firm’s proprietary research.

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Each fund seeks to achieve lower levels of volatility than its benchmark through a portfolio construction process utilizing individual stock selection, as well as the elimination of the most volatile stocks in each fund’s investment universe.

The funds are managed by members of the MFS quantitative solutions team. Portfolio managers James Fallon and Matthew Krummell direct the MFS Low Volatility Equity Fund. Fallon is joined by another portfolio manager, Jonathan Sage, on the MFS Low Volatility Global Equity Fund.

The funds are available for purchase in multiple share classes (A, B, C, I and R1–R5) through financial advisers, financial planners, broker/dealers and other financial intermediaries and retirement platforms.

MFS is a global asset manager that strives to integrate research, global collaboration and active risk management.

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