Judge Clears Path for Fund Trading Suit against Strong

December 9, 2005 (PLANSPONSOR.com) - A federal judge in Maryland has allowed a K plan participant to push forward with his allegations of an Employee Retirement Income Security Act (ERISA) fiduciary violation against a provider in connection with market timing and late trading.

US District Judge Catherine Blake of the US District Court for the District of Maryland issued the ruling as part of a multi-district litigation case that also includes similar charges against seven other fund providers.

In addition to the portion of the case against Strong Capital Management involved in Blake’s most recent ruling, similar suits are pending against Alliance , Amvescap, Bank of America, Bank One, Janus and Marsh & McLennan/Putnam. The multi-district case was filed by New York state Attorney General Eliot Spitzer, who has spearheaded a state/federal fund industry investigation in recent years that has focused on market timing, late trading and certain sales practices.

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The court rejected the argument that as a former participant who had already received his lump-sum distribution from his K plan, Flynn lacked standing to pursue a fiduciary breach claim under ERISA.   Asserted Blake: former participants “should not forfeit a cause of action under ERISA to recover what is rightfully theirs under the plan by taking a pay-out of what they incorrectly believe is all that is owed to them at that time.” Flynn charged that the Strong mutual funds improperly permitted illegal late trading and/or market timing and that the value of participants’ investments was diluted as a result.

The court also threw out Strong Capital’s argument that Flynn’s lawsuit should be dismissed because, as an eligible individual account plan, the K plan’s investment in Strong Capital’s mutual funds was entitled to a presumption of prudence under which the decision to invest in the funds should be deemed prudent unless Strong Capital faced “impending collapse.”

According to Blake’s ruling, Flynn started working at Strong Capital in September 2001 and was later was transferred to Strong Financial Corp., where he participated in a K plan that consisted of 28 investment alternatives from the Strong family of mutual funds. According to the court, Strong Capital was the investment adviser for the mutual funds.

Flynn left his employment at Strong Financial in 2003 and received a lump-sum distribution from his 401(k) account.

The opinion in In re Mutual Funds Investment Litigation, D. Md., No. 1:04:md-15864-CCB, 12/6/05 is  here .

SURVEY SAYS: Will Your Boss Get a Present?

December 8, 2005 (PLANSPONSOR.com) - As the holidays approach, many of us will be exchanging gifts with friends and co-workers. This week, we asked readers if they would be giving their BOSS a gift.

Believe it or not, nearly half ( 44.29% ) said they were – though the motivations for doing so were mixed… and generally, it was a “group” endeavor.  “Yes, all of the managers and supervisors who report to my boss chip in and get him a gift,” noted one.   “Saves the time and trouble of trying to get an individual gift.”  Another said, “It will be a group effort/presentation.   As with any team, we will all either come up smelling like roses, or go down together!” “A) Yes…. And I hate it!” said another.  “My boss always gets me a present, which is very nice, but I feel compelled to return the nicety, which just adds to the stress of holiday shopping and not knowing what to get people!”  Another said succinctly, “Yes.   Don’t dare not to.”

“I have the rare good fortune of having a great job with a great boss in a fabulous office environment.   He deserves a little reward for bringing me in, well, besides his good fortune to have me working for him!” noted another.  “Yes, but it’s because she’s one of my best friends, not because she’s my boss,” said another.  

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The next most common response ( 23% ) was “other” – and while there was variety here, mostly it fell into one of two camps: the adoption of some kind of gift exchange within the department (that included the boss as a participant, and exchanges that allowed for the “theft” of gifts as part of the distribution were popular), or the decision to devote those resources to helping others in need.  “The management team of our office has indicated that, rather than have everyone go in on getting them gifts as we had in years past, we put the money towards the family that we adopted,” noted one, who went on to say what a great idea it was to “shop for a family who needs everyday stuff instead of finding something for someone who can buy pretty much anything then want.”  Another noted, “Last year some of us informally decided NOT to exchange gifts and instead donate the amount we normally would spend on office gifts to a local charity.   Our department was already collecting donations at our holiday lunch, so this made the donation to the charity much larger.   It worked out great for everyone — no more searching for affordable (i.e., cheap) gifts for people who don’t really need little token gifts, and the charity received a much larger donation.   The bosses loved it, too!”

Other was also a category for some other responses, including the reader who noted, “The question assumes everyone has only ONE BOSS, while in this complicated day and age in which we live, that, unfortunately, isn’t the case for 100% of us. Having more than one (three actually, in a complex, matrix-reporting structure which still defies any explanation!!!) boss is complicated enough, given that they are in different locations, and all of which are constantly battling for a greater % of my time!! So, sorry, no gifts for them!! (I don’t think they’d be happy with a third of a gift each, anyway!!!!!!!!!!!)”   Echoing those concerns was the reader who said, “Yes – although your question has me thinking about the arrangement.   I am an administrative assistant and therefore the only employee of two bosses.   Last year I gave them both gifts, but they went together and I only received one.   Maybe I should make them share this year….”

Another 22% of the vote was split almost evenly between two other categories – no, other than the privilege of working for him/her; and no, and if you knew him/her you’d understand.  “His gift is that I am still here, despite him,” explained one, while another said, “S/he has no idea how lucky they are I’m still here. They are living on borrowed time.”  Or, as one reader noted, “d) No, other than the privilege of having me working for her because (e) if you knew my boss, you’d understand.   Sadly, (g) my co-workers and I are concerned that a gift would be interpreted as positive reinforcement of her management style.”

The remaining 11% were split between a simple “No, we don’t exchange gifts,” “No, wouldn’t want to be seen as currying favor,” and “Maybe – depending on if they’re naughty/nice.”   In the latter category was a reader who said, “He is a great guy.   I’d buy him a BMW if he didn’t already have one.   He is both naughty and nice….a genuine problem for H/R.   Maybe I could take him out for a beer and we could both be real people for a few hours.”

There were also comments that, while not really “reflective” of any particular response category, nonetheless provided some levity:

“Having recently applied for the job my new boss now has, it’s sufficient to give the new boss my full support.   :-)”

“I will be giving some small gift to my co-workers…something like a gift set of coffees, teas, and hot chocolate.   The boss, however, will get a lump of coal.”

“Now that you mention it, no, we don’t give the boss a gift. Interestingly enough, however, we do give the boss’s boss a gift, and our boss takes us out for lunch and a movie.”

“We have a new Corporate Code of Conduct that prohibits such gifts. Whew!”

“Yes, everyone in our department is contributing whatever they want to the purchase of a 6-foot tiki for our boss’s back yard.   We will be forever beholden to our co-worker who came up with the idea for probably one of the most unusual gifts he’ll ever receive.   We can hardly wait to see the look on his face when he walks into his office and sees it!”

“I came to my new company this past July and made the inquiry regarding Christmas gifts. It seems I have entered into a group where everyone buys gifts for everyone. Not a big deal except my wife met my assistant this past weekend at our holiday party. I had suggested buying this person a sweater because she always seemed to be cold in the office. Once my wife met this person, I got in trouble for not informing my wife that the assistant is “so hot” (wife’s words), and now we are looking for other gift ideas that aren’t ‘so personal’!”

And – from a totally different reader – the acknowledgement that, “I will also be giving many gifts along with a card and flowers to my BOSS (i.e., wife).”

But this week’s Editor’s Choice goes to the reader who replied, “I haven’t yet bought any gifts, but I have scheduled him in for three strategy sessions with three different ghosts.”

Thanks to everyone who participated in our survey!

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