Compliance January 9, 2012

Pension Funds’ Securities Fraud Suit Revived by Appellate Court

The 2nd U.S. Circuit Court of Appeals reversed a lower court’s dismissal of a securities fraud lawsuit brought by four pension funds.
Reported by

Investors of Celestica Inc., a Canadian electronics manufacturer, sued the company and its former chief executive officer, Stephen Delaney, and former chief financial officer, Anthony Puppi, in 2007.  Investors claimed misstatements artificially inflated the company’s share price, causing them to lose money when the true costs associated with a restructuring became public, according to Bloomberg.

The group seeks damages on behalf of all those who bought the Toronto-based company’s stock from January 27, 2005 to January 30, 2007.  

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The appellate panel found the shareholders alleged sufficient facts to support the defendants’ scienter, or knowledge they knew they were misstating Celestica’s earnings and financial prospects.  

“The particular allegations that Delaney and Puppi were specifically informed, and had reason to know of the growing inventory stockpile in Celestica’s Mexican and American facilities are sufficient to establish the individual defendants’ scienter,” the panel said in the ruling. “Moreover, those allegations are sufficient to establish corporate scienter on behalf of Celestica.”  

The lead plaintiffs are the New Orleans Employees Retirement System and three Ontario funds: Millwright Regional Council of Ontario Pension Trust Fund, Carpenter’s Local 27 Benefit Trust Fund and Dry Wall Acoustic Lathing and Insulation Local 675 Pension Fund.  

The decision in New Orleans Employees Retirement System v. Celestica, Inc. is here.

 

Data & Research January 9, 2012

Study: Small Business Owners Prefer Same-Sex Advisers

A study by The American College reveals small business owners show a strong bias for financial advisers of the same gender, with men exhibiting a stronger gender bias.
Reported by

Approximately 61% of female small business owners prefer speaking to a financial adviser who is a woman, yet only 24% of men prefer to speak to female financial advisers. According to 2010 data from the Bureau of Labor Statistics, women made up 30.8% of the personal financial adviser population.

Conversely, 75% of men prefer to speak to male financial advisers, while only 40% of women exhibit the same preference.

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Other results from the study include:

•  Women are more concerned about retirement planning than men (84% women vs. 76% men) and report taking more action to address this issue;

•  More women have consulted with a financial adviser about maximizing business-owner benefits (44% women vs. 33% men);

•  More women have consulted with an adviser about starting a retirement plan (41% women vs. 29% men);

•  More women than men list not having enough money in retirement as one of their top three concerns;

•  Women and men said they take an active role in understanding needs in retirement planning (75% women vs. 85% men);

•  Many have not estimated how much capital they will need to be able to retire (34% women vs. 26% men);

•  Only a few have a formal, written financial plan for managing income and expenses in retirement (24% women vs. 34% men) or have a formal, written plan for transitioning their business at retirement (11% women vs. 28% men); and

•  Most small business owners have not consulted with an adviser about retirement planning (44% women vs. 33% men) but those who have report being satisfied with their adviser relationship (76% women vs. 85% men).

For the survey, “businesses owners” were defined as individuals who own 50% or more of the business, and who make or share in financial and other business decisions. The survey included 1,255 interviews (835 women and 420 men).

 

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