Compliance September 1, 2010

WaMu to Settle Stock Drop Suits for $49M

A federal court has given preliminary approval of a settlement that would resolve lawsuits alleging breaches of fiduciary duties under the Employee Retirement Income Security Act by Washington Mutual.

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A news release from law firm Keller Rohrback said the proposed settlement provides for a payment of $49 million, minus expenses including court-approved attorneys’ fees and expenses and service awards to the plaintiffs who brought the lawsuit, taxes and other costs, to be allocated to class members whose 401(k) accounts suffered losses as a result of investing in Washington Mutual common stock.   

The 401(k) suits revolve around allegations the company offered a company stock investment in its plan after it was no longer prudent to do so.  U.S. District Judge Marsha J. Pechman of the U.S. District Court for the Western District of Washington was to decide on initial motions to dismiss the cases in mid-September (see September Ruling Expected in WaMu 401(k) Cases).  

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Compliance September 1, 2010

NAIRPA Comments on SEC Target-Date Fund Proposal

In a letter to the Securities and Exchange Commission (SEC), the National Association of Independent Retirement Plan Advisors (NAIRPA) calls for “focused disclosure” of target-date funds and said that a summary disclosure may not be enough.  
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The statement from Brian H. Graff, executive director and CEO of NAIRPA and its’ affiliate organization, the American Society of Pension Professionals & Actuaries (ASPPA), says that a more focused disclosure is necessary because: “Essentially one size does not fit all when it comes to disclosure of the risk, volatility, age horizon, asset allocation or glide path of TDFs.”  The statement was in response to a proposal by the SEC enhancing the disclosures made by target-date funds (see “SEC Releases Target-Date Fund Disclosure Proposal“)

NAIRPA would like to see disclosures divided into three groups: 1) the plan sponsor or fiduciary 2) the active participant, and 3) the default participant.  The specific needs of these groups are outlined in its letter to the SEC (see NAIRPA’s official comments here).   

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“While we applaud the SEC’s proposal for summary disclosure of the asset allocation at or near the name of the fund, we submit that there is other information that is equally important,” said Graff in the letter.   

 

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