Administration September 28, 2012

Pension Funds to Get $2.43B in BofA Settlement

September 28, 2012 (PLANSPONSOR.com) – Ohio Attorney General Mike DeWine announced a historic $2.43 billion settlement in a class-action lawsuit with Bank of America (BofA).
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The complaint alleges statements made in 2008 regarding the BofA merger with Merrill Lynch kept under wraps billions of dollars in known losses and billions more in accelerated agreed-upon bonuses to be paid to Merrill Lynch executives and employees (see “Lead Plaintiff Group in BofA Suit over Merrill Deal Files Amended Suit”). The lead plaintiff group includes the State Teachers Retirement System of Ohio; the Ohio Public Employees Retirement System; the Teacher Retirement System of Texas; Stichting Pensioenfonds Zorg en Welzijn, represented by PGGM Vermogensbeheer B.V.; and Fjärde AP-Fonden.    

It is estimated that the State Teachers Retirement System of Ohio and the Ohio Public Employees Retirement System will receive a total of $20 million. This could be higher or lower depending on the number of claims filed. In addition to the Ohio public pension systems, approximately 70,000 individual Ohioans are potential class members in the case.  

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According to the DeWine’s announcement, the settlement is the single largest securities class action settlement ever resolving a Section 14(a) claim—the federal securities provision designed to protect against misstatements in connection with a proxy solicitation. The settlement is one of the four largest settlement amounts ever funded by a single corporate defendant for violations of the federal securities laws, and the settlement is the largest securities class-action settlement where executives of the defendant were not criminally charged.
Benefits September 28, 2012

CFOs Concerned About Cost of Benefits

September 28, 2012 (PLANSPONSOR.com) – Fifty-four percent of CFOs in the U.S. do not foresee any changes in the health of the economy during the next six months, according to a survey by Grant Thornton LLP.
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Still, most CFOs surveyed are optimistic about maintaining (45%) or increasing (37%) their headcount over the next six months.  According to the survey, the biggest barrier to employee and company financial growth is the cost of employee benefits, with 56% identifying health care and pensions as the prime culprits.   

Furthermore, as the cost of health care grows, 77% of those surveyed anticipate company and employee contributions to increase over the next year. Yet benefits such as life insurance and disability are expected to remain mostly unchanged.   

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“With the economy in a fragile recovery, CFOs are most concerned about rising health care costs when it comes to compensation and benefits,” said Stephen Chipman, chief executive officer of Grant Thornton LLP. “Most companies will continue to see a significant increase in health care costs unless they have taken proactive steps to promote wellness and better utilization of health care benefits, which can help ease the increase of these costs.”   

The survey also shows that 45% of CFOs believe deficit reduction is the No. 1 initiative to improve overall economic optimism, while 27% believe job creation is the solution. In addition, 46% said that a tax incentive is not the solution. Even so, 30% of those surveyed believe a direct tax incentive for hiring new workers would increase the likelihood of expanding their work force.   

Grant Thornton conducted the CFO Survey between June 21 and July 24, with 400 CFOs and comptrollers participating.

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