December 7, 2000 (PLANSPONSOR.com) - State Street
has agreed to buy a majority interest (75%) in money manager
Bel Air Investment for $217 million in cash and
stock.
Los Angeles-based Bel Air Investment Advisors focuses on
managing funds of wealthy clients, and had $3.1 billion in
assets under management for 200 clients and $600 million in
brokerage assets at September 30.
State Street, which will issue 900,000 shares in the
deal, expects the acquisition to reduce its earnings by
five cents a share in fiscal 2001 and three cents a share
in 2002, according to Dow Jones.
State Street has the option to purchase the remaining
25% beginning in 2006 – and Bel Air’s owners can require
State Street to purchase a portion of the 25% stake
beginning in 2004.
Bel Air executives signed non-competition agreements
good for up to five years after closing, currently slated
for early next year.
Supreme Court: Pension Plans Can Sue
Non-Fiduciaries
June 12, 2000 (PLANSPONSOR.com) - In a unanimous
decision Monday, the Supreme Court ruled that employee
benefit plans can sue parties in interest, even if they are
not fiduciaries.
The decision means
Ameritech
and its pension plan trustee,
Harris Trust and Savings Bank
, can continue to try to recoup $21 million lost in a late
1980s real estate deal with
Salomon Brothers Smith Barney
(SSB).
The pension plan made the investments at the direction
of investment manager (and fiduciary of the Ameritech plan)
National Investment Services of America
(NISA), which allegedly caused the plan to engage in a
prohibited transaction with SSB. That transaction involved
SSB’s sale of interests in two motel chains to the pension
plan, interests that were wiped out after the motel chains
failed.
Ameritech and Harris had sued SSB, alleging that the sale
had been a prohibited transaction under ERISA. They
sued seeking a return of the purchase price with interest,
and a disgorgement of profits made by SSB as part of the
transaction.
SSB contended that it could not be sued under ERISA,
claiming that since the law did not expressly impose a duty
on a nonfiduciary party-in-interest, it could not be sued
by the Ameritech plan. The 7th US Circuit Court
agreed, and dismissed the case.
Not Who, But What
However, the Supreme Court held that the focus of the
law was not on the parties that could be sued, but on the
actions that violate ERISA. Further, that the “plain
implication” is that an action could be brought against an
“other person who knowingly participates in a fiduciary’s
violation…”. In sum, while ERISA only imposes the
affirmative duty on a fiduciary, an involved party can
still be sued.
The case is
Harris Trust and Savings Bank vs. Salomon Smith Barney,
99-579
. (You need Adobe Acrobat to read this file).
Doctor Treatments Not Fiduciary Acts
In another unanimous decision today, the Supreme Court
has ruled that patients cannot sue health maintenance
organizations (HMOs) under ERISA when they give doctors
financial bonuses to cut costs that result in improper
medical treatment.
In a major victory for the Justice Department and the
health care industry, the Court held that treatment
decisions were not fiduciary acts within the meaning of
ERISA, noting that state rather than the federal law
governed this relationship. The Court said that an
inducement to ration care was the very point of any HMO
scheme, and rationing necessarily raises some risks while
reducing others.
The case is Pegram vs. Herdrich, 98-1949. (You need
Adobe Acrobat to read the case).