Benefits April 27, 2010

New York Life Revived as Delaware 403(b) Vendor

April 27, 2010 (PLANSPONSOR.com) - A decision to partly revive New York Life's status as a 403(b) vendor will help about 100 state employees in Delaware avoid the loss of life insurance policies.
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The News Journal reports that New York Life was told last year it had been disqualified as a vendor because it was unable to comply with new data sharing requirements of the Internal Revenue Service 403(b) regulations. The insurer will now be allowed to service its existing 403(b) contracts, but cannot accept new accounts.  

New York Life will resume collecting pre-tax premium payments beginning in May. Had a resolution not been reached between the state treasurer and insurance commissioner and New York Life, the policyholders likely would have had to cash out their policies for far less than what they paid in, and likely would have had trouble finding new insurance at affordable rates, officials said, according to the news report.  

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The New York Life contracts were concentrated at Delaware State University, Delaware Technical & Community College, and public school districts, and even though participants haven’t been able to pay into the plans for more than a year, the policies remained in effect.  

The News Journal said that out of more than 110 vendors that had been servicing 403(b) accounts for Delaware state employees, only 13 were able to comply with the new requirements of the IRS regulations.
Administration April 26, 2010

Public Funds Sue Lehman and Auditor

April 26, 2010 (PLANSPONSOR.com) - Lehman Brothers Holdings Inc.’s auditor Ernst & Young LLP was added as a defendant in a lawsuit seeking to recover money from former executives and underwriters.
Reported by

Bloomberg reports the lawsuit was amended to add findings contained in a 2,200-page report published March 11 by Lehman bankruptcy examiner Anton Valukus. The amended complaint was filed yesterday on behalf of a group of retirement funds including the Alameda County Employees’ Retirement Association in Oakland, California, and the Government of Guam Retirement Fund.  

The lawsuit, originally filed in June 2008, claimed that New York-based Lehman made false statements about liquidity, failed to take timely writedowns of its positions on mortgage-backed securities, and overstated their value. The defendants in the case include former Lehman Chief Executive Officer Richard Fuld.  

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Lehman filed for bankruptcy in September 2008 with $639 billion in assets, and has said it will spend five years liquidating to pay unsecured creditors as little as 14.7 cents on the dollar.  

In an e-mailed statement to Bloomberg, Charlie Perkins, an Ernst & Young spokesman, said: “Throughout our period as the auditor of Lehman, we firmly believe our work met all applicable professional standards, applying the rules that existed at the time.”  

The case is In re Lehman Brothers Equity/Debt Securities Litigation, 08-cv-05523, U.S. District Court, Southern District of New York.

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