Fair Disclosure Carries Huge Price Tag

May 17, 2001 (PLANSPONSOR.com) - The Securities Industry Association (SIA) sees costs of compliance with the Securities and Exchange Commission's (SEC) fair disclosure rule far outweighing the benefits, according to research conducted by the group.

The costs of complying with Regulation FD, designed to end selective disclosure of market-moving information to investment professionals, are borne mostly by stock issuers and ranges from $250 million to $400 million, significantly higher than the SEC?s projected annual $34 million to $49.5 million per annum, the report notes.

The SIA, which opposed the rule prior to its October enactment, argues that although Regulation FD has led to increased investor confidence in the markets and has leveled the playing field for individual investors, uncertainty over the parameters and the potential application of the rule has hurt both the quantity and the quality of the information released.

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While the association supports the SEC’s disclosure goals and is not seeking a repeal of the regulation, it is recommending some modifications and is seeking specific guidance on what constitutes significant or material information that companies must disclose universally, a major contributor to high corporate legal bills.

The report, based on both in-house and commissioned research as well as results from previous surveys was released Thursday to coincide with a House capital-markets subcommittee hearing on the rule.

– Camilla Klein  editors@plansponsor.com

Employer Actions Transcend Casual Treatment

April 17, 2001 (PLANSPONSOR.com) - A federal appeals court decision that a grocery store chain must make pension contributions on behalf of those employees that they classified as "casual", was left standing by the US Supreme Court.

Kroger had classified all part-time employees as “casual”, but the district court found that part-time employees were not “casual” workers as defined by the collective bargaining agreement.

Employer Actions

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The court, in Kroger Co. v. Central States Southeast and Southwest Areas Pension Fund, found that workers were not hired on a short-term basis since the store had employed them expecting them to shift to full-time regular employee status once an opening occurred.

In the earlier ruling, the judge had noted that casual employment was defined as “short and indefinite” and therefore inconsistent with the fact that part-time employees were required to bid on permanent positions.

The court held that the grocer?s practice of treating the employees as “casual” workers for pension contribution purposes did not override “the unambiguous definition of casual employees contained in” the collective bargaining agreement.

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