Investing January 22, 2005

Global Funds Grow, Domestic Shrink as Trends Continue in December

January 21, 2005 (PLANSPONSOR.com) - Inflows into stock mutual funds were $12.4 billion in December, half of November's inflows due to seasonally light activity.
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The Lipper FundFlows Insight Report for December shows that stock funds took in $6.2 billion in the last month of the year, with mixed-equity funds bringing in another $6.2 billion, bringing the total to $12.4 billion.

This movement reflected caution and an overseas appetite for investors, according to the report (See Money Market, World Equity Funds Strong Draw in November ). This appetite was indicated most prominently by the $6.8 billion inflow into world equity funds, compared to only a $900 million inflow into US diversified funds. The domestic sector actually saw an outflow of $1.7 billion on the month.

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US Large-cap funds saw the biggest outflow on the month, posting losses of $7.9 billion. Multi-cap funds saw the greatest inflows at $5.2 billion.

Bond funds lost out on the month, posting outflows of $2 billion. Municipal bond funds’ flows were proportionally more negative then those of taxable-bond funds, according to the report. Assets in municipal bonds are only 38% of taxable-bonds, but both posted $1 billion outflows on the month. Breaking it down, long-term bonds actually gained $100 million on the month, but this gain was offset by a $2.1 billion outflow in short and intermediate bonds.

Money market funds also suffered in December, posting outflows of $5.5 billion. This consisted of $10.5 billion outflows in the retail class and $5 billion inflows in the institutional class.

Compliance January 21, 2005

Court: Federal, State and HIPAA Law Doesn't Prohibit Employment Records Release

January 21, 2005 (PLANSPONSOR.com) - A federal judge has ruled that state law, federal confidentiality law and the Health Insurance Portability and Accountability Act (HIPAA) do not prohibit the disclosure of employment records in a discrimination lawsuit.
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>In Beard v. City of Chicago , US District Judge Sidney Schenkier of the US District Court for the Northern District of Illinois, a terminated fire department paramedic has won the right to have other employees’ records regarding leave of absences, psychological and substance abuse disclosed in court. City of Chicago officials had argued that federal, state and HIPAA law prohibited such action from being taken.

>In ruling that the information could be disclosed, Schenkier said that HIPAA covered entities are subject to the privacy rule, and the employer was not a covered entity in this case. The judge also said that the employer held leave records in its role as an employer, and thus such records are not subject to the act. Schenkier also ruled that the privacy rule allows covered entities to release protected health information in court when certain conditions are met, which in this case, they were.

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>Schenkier rejected the claim that federal substance abuse law prohibited the release of the records, since she claimed the employer did not meet the criteria laid out. The law relates to the protection of records relating to a substance abuse program or activity that is conducted, regulated or assisted by the federal government.

>Finally, the judge ruled that state law did not prohibit the release of such records because all the employee’s claims were based on federal law and not state law. Schenkier did suggest that the federal psychotherapist-patient privilege might apply to certain leave records, directing the employer to individually view each record to determine if this is the case.

>The judge did however recommend that the two parties find a way to limit distribution of the records.

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