Investing July 17, 2006

Nation's Retirement Savings Continues to Grow

July 17, 2006 (PLANSPONSOR.com) - A new look at the nation's combined retirement savings reflects a 40% increase since 2002 and a continuing trend toward participant-directed savings vehicles.
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A news release from the Investment Company Institute said that its latest data show a total retirement net egg of $14.5 trillion in 2005 – a 7% hike over the previous 12 months. Retirement assets now account for more than one-third of household financial assets, up from about 23% in 1985, according to ICI.

The newest report also reflects the trend in which employers move workers away from defined benefit and toward defined contribution programs. The majority of retirement savings, 51%, is now invested in DC plans and Individual Retirement Accounts (IRAs). Over the past two decades, DC plans and IRAs have been growing more rapidly than other retirement accounts; in 2005, DC and IRA assets grew almost 9% while other retirement vehicles grew less than 5%.

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Mutual funds remain important stewards of retirement assets, representing about $3.4 trillion of the total stockpile. Mutual funds’ share of the retirement market continued to increase, given their prevalence in rapidly growing DC plans and IRAs. Funds now manage 48% of assets in DC plans and 45% of IRA assets.

Other highlights of the study include:

  • Almost two-thirds of retirement assets are held in employer-sponsored plans, including both defined contribution and defined benefit plans.
  • A significant portion of assets held in IRAs originated in employer plans and were subsequently rolled over into IRAs.
  • In 2005, nearly 70% of the $3.4 trillion in mutual fund retirement assets were invested in equity funds.

The full ICI report is  here .

Compliance July 14, 2006

Broadcom Internal Probe Finds Backdated Options

July 14, 2006 (PLANSPONSOR.com) - The company plans to restate results for the last five years, recording expenses of more than $750 million.
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An internal investigation by Broadcom Corp into its stock options grants to employees prompted the company to announce on Friday that it would restate its financial results for the past five years and record non-cash expenses of more than $750 million.

The company said it found no evidence of improper behavior in the preliminary review, only that for certain option grants awarded during the years 2000 to 2002, the allocations to individual recipients and/or formal corporate approvals had not been completed as of the original accounting measurement dates, according to a news release.

The company, which provides semiconductors for wireless communications, stands next in a long line of technology companies entangled in a federal stock options probe that some have likened to the mutual fund trading scandals, which exploded a few years ago ( Stock Option Probe Biggest Since Abusive Fund Trading Cases ).

In June, US regulators asked Broadcom for documents related to how it grants stock options to employees.

No issues have been identified that affect equity awards issued to Broadcom’s co-founders, CEOs or any member of the Board of Directors. But about 95% of options awards granted since 1998 have gone to employees as part of their compensation packages, according to a release.

According to a release from the company, no equity award has been identified that was not authorized, or where any officer or director approved an individual equity award from which he or she personally benefited.

The company said the additional non-cash stock-based compensation expense will not affect the company’s current cash position, financial condition or previously reported revenues and will be offset by corresponding increases in additional paid-in capital, leaving shareholders’ equity unaffected.

The company has decided to restate its financial statements for the years 2000 to 2005 and for the first quarter of 2006.

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