Compliance October 10, 2007

Keller Rohrback Announces ERISA Investigation Concerning SSgA Bond Funds

The Keller Rohrback L.L.P. law firm has is investigating State Street Global Advisors (SSgA) and State Street Bank&Trust Company for potential violations of the Employee Retirement Income Security Act (ERISA) by marketing funds with misleading statements on investment strategy.
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According to an announcement from the firm, the investigation focuses on retirement plans that offer State Street’s Government Credit Bond Fund, the SSgA Intermediate Bond Fund, the SSgA Yield Plus Fund, or the SSgA Bond Market Fund.

State Street marketed these funds to retirement plans as investments that would provide “stable, predictable returns” in line with an index of U.S. government and corporate bonds; however, according to a lawsuit recently filed by Prudential Retirement Insurance and Annuity Co., State Street changed its investment strategy without notification (See Prudential Accuses SSgA of “Misrepresented’ Investment Strategies).

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The Prudential suit claimed State Street committed a large of portion fund assets into instruments that included “asset-based securities that overwhelmingly derived their value” from home-equity loans, mortgage-backed securities swaps, and derivatives, causing the funds to become highly risky investments that have caused substantial losses to plan participants who invested in the funds.

Last week, just days after the Prudential suit was filed, Attorneys General in Alaska and Idaho said they are looking into possible legal action against State Street Corp. over losses their state retirement funds suffered investing in two of the funds (See State Street Could Face Another Investment Strategies Suit).

Compliance October 10, 2007

DoL Releases Advance Copies of Revised Form 5500

Advanced copies of the 2007 Form 5500 Annual Return/Report of Employee Benefit Plans and related instructions were released Wednesday by the U.S. Department of Labor (DoL), the Internal Revenue Service (IRS), and the Pension Benefit Guaranty Corporation (PBGC).
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According to a press release from the DoL, the three significant changes to the Form 5500 for plan year 2007 are:

  • A new simplified reporting option for eligible plans with fewer than 25 participants required by the Pension Protection Act (PPA),
  • Revised Schedule B instructions to reflect updated mortality tables and the list of codes used for valuation purposes, as well as for calculating current liability for plan years beginning on or after Jan.1, 2007, and
  • Instructions that caution certain filers that, due to form changes required by the PPA that will appear in the 2008 Form 5500, they will have to wait for the 2008 forms rather than using the 2007 forms if they must file a 2008 short plan year report.

Revisions of the Form 5500 package for 2009 along with electronic filing and EFAST2 changes are expected to be released soon, according to the press release.

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The instructions for filling out the Form 5500 are here.

The actual Form 5500 is here.

General information about the Form 5500 is available here.

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