Benefits April 7, 2005

Feds Settle USERRA Case with Bridgestone

April 7, 2005 (PLANSPONSOR.com) - Bridgestone/Firestone North American Tire has agreed to advance an Army National Guardsman within its pay schedule and give him back pay as part of an out-of-court settlement with the federal government.
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According to a BLR.com news report, the US Justice Department had sued the tire company, alleging that it failed to follow the Uniformed Services Employment and Re-employment Rights Act of 1994 (USERRA) by not advancing the guardsman during a 15-month period while he was on active duty.

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The government’s suit said that the guardsman joined the service in August 2000 and was later hired by Bridgestone in May 2002. The guardsman was then activated as a member of the Army National Guard under Operation Enduring Freedom/Iraqi Freedom from December 2002 to March 2004.

Upon his return to Bridgestone, the guardsman was paid at the same rate as when he left, rather than being advanced on the company’s progressive pay schedule, according to the Justice Department.

The Veterans’ Employment and Training Service (VETS) of the Labor Department referred the guardsman’s complaint to the Justice Department upon completion of its investigation.

More information about the USERRA law and its mandates is here .

Administration April 6, 2005

SEC Revises Beacon Hill Complaint

June 16, 2004 (PLANSPONSOR.com) - The Securities and Exchange Commission (SEC) has revised its two-year-old civil fraud action against New Jersey hedge fund Beacon Hill Asset Management.
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In the original complaint, the SEC had charged Beacon with materially overstating the net asset values and returns it was earning on its funds, which was conveyed to investors through the distribution of a series of e-mail messages that purported to be a true picture of the performance of the various funds.   However, after a little more digging, the SEC now contends the deception at Beacon Hill took place over a 10-month stretch and that the “manipulative conduct” allowed the hedge fund to “report steady growth and hide losses,” according to a report by TheStreet.com.

The hedge fund initially drew the raised eyebrow of the SEC after losing more than 50% of its value, roughly $400 million, through losses in mortgage-backed securities, leading to the initial SEC charges to its investors (See SEC Files Fraud Charges Against Hedge Fund Company ).  Following the SEC’s allegations,federal prosecutors launched their own criminal investigation of the firm(See Feds Launch Criminal Probe Against Beacon Hill ).

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Beacon allegedly told investors the Bristol and Safe Harbor Funds were earning around 9% in the spring and summer of 2002.  The company then told its broker, Bear Stearns & Co, that the funds’ total value was $756 million in September.  However, Bear Stearns informed Beacon Hill that the funds held only $259.6 million, according to the complaint. 

After being told of the actual holdings, Beacon Hill reportedly told investors that the funds’ values had dropped 25%.  Still, it was not until October 17, 2002 that the company disclosed greater losses than previously stated, reporting a 54% decline, the Wall Street Journal reported recently. The legal complaint alleges that, in reality, beginning in July 2002, the funds took a large, highly leveraged short position in U.S. Treasury bonds. When interest rates continued to fall, the value of the funds fell, an event that allegedly went unreported to investors.

Charged in the latest complaint were Jack Barry, Thomas Daniels, John Irwin and Mark Miszkiewicz, and New York City-based Asset Alliance Corporation, a 50% owner of Beacon Hill.  Also the fund administrator, ATC Trustees Ltd, was charged.   Besides the four Beacon Hill executives, the SEC also named their spouses as defendants. Regulators want to disgorge any profits the wives received from the fraudulent scheme.

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