Well, it is time for that last 2003 Benefitsblog post. Thanks to all of my readers and new friends who have made this first year of Benefitsblog such an enriching experience. Happy New Year and many blessings to you for the coming year!
And for those who like this sort of thing, I have put together some interesting quotations from cases, news items, government press releases, blogs, etc. which remind us of what went on in the Benefits world in 2003. See if you can guess the author or speaker (answers are below):
1. “Perhaps one of the beneficial side effects of the unfortunate spate of corporate fraud and mutual fund investigations is a renewed emphasis on good corporate governance and good plan governance.”
2. “After extensive research, this Court concludes for the reasons discussed supra that even where the named fiduciary appears to have been granted full control, authority and/or discretion over that portion of activity of plan management and/or plan assets at issue in a suit and the plan trustee is directed to perform certain actions within that area, the directed trustee still retains a degree of discretion, authority, and responsibility that may expose him to liability, as reflected in the structure and language of provisions of ERISA. At least some fiduciary status and duties of a directed trustee are preserved, even though the scope of its “exclusive authority and discretion to manage and control the assets of the plan” has been substantially constricted by the directing named fiduciary’s correspondingly broadened role, and breach of those duties may result in liability.”
3. “We are sending a message to every pension plan officer, director and fiduciary: you have a solemn duty to safeguard your employees’ pension assets. If you put those assets in jeopardy through neglect or malfeasance, we will hold you accountable.”
4. “We continue to believe that sunshine is the best disinfectant for abusive transactions.”
5. “Fund lawyers, under SEC rules that became effective August 5, 2003, have a similar “reporting up” duty. The SEC’s attorney conduct rules apply to any attorney employed by an investment manager who prepares, or assists in preparing, materials for a fund that the attorney has reason to believe will be submitted to or filed with the Commission by or on behalf of a fund. Under these rules, an attorney who is aware of credible evidence of a material violation of the securities laws, or a material breach of fiduciary duty, must report this evidence up the chain-of-command or ladder to the fund’s chief legal officer, and ultimately, to the independent members of the mutual fund board.”
6. ” . . .ERISA generally, and section 514(a) particularly, have become virtually impenetrable shields that insulate plan sponsors from any meaningful liability for negligent or malfeasant acts committed against plan beneficiaries in all too many cases. This has unfolded in a line of Supreme Court cases that have created a ‘regulatory vacuum’ in which virtually all state law remedies are preempted but very few federal substitutes are provided. . . Unfortunately, the price of all this has been descent into a Serbonian bog wherein judges are forced to don logical blinders and split the linguistic atom to decide even the most routine cases.”
7. “Defendants question why Congress would use different language in succeeding subparagraphs (accrued benefit and benefit accrual) unless it intended the subparagraphs to cover different types of benefits. The answer is simple. Congress chose to be grammatically correct. (In the footnote of the opinion: “For a simpler example, consider the word popcorn. Popcorn is the word used to describe the product created by exposing corn kernels to extreme heat. If asked to draft a phrase grammatically correct, one would say “the rate corn pops.”)
8. “The aspect of the job I like most is that all I have to do is do right. Every day when I come to work and pick up a file, that is my only job. Let right be done.”
9. “Despite the uncertainty one thing is true, however – a struggling pension is better than no pension at all.”
10. “In their brief, plaintiffs attempt to salvage this claim by arguing that, while the SPD may have contained a general reference to limitations on excessive trading, the plan never defined excessive trading in any way, nor were plan employees able to explain what it meant when plaintiffs inquired into the matter. Since no one could explain the specifics of this limitation, they conclude, by implication “no such limitation on ‘excessive trading’ existed . . .Such reasoning is clearly spurious. A non-specific limitation is nonetheless a limitation. To argue as plaintiffs have is akin to arguing that since your mother did not tell you how long you were grounded for, you must not be grounded. Indeed, such arguments only serve to prove the opposite point, namely that a general limitation was in place and that plaintiffs were well aware of its existence.”
Answers: 1. Remarks of Assistant Secretary Ann L. Combs Before the Annual Conference of The National Defined Contribution Council October 16, 2003. 2. District Court Judge Melinda Harmon for the Southern District of Texas in Tittle v. Enron Corp. 3. U.S. Secretary of Labor Elaine L. Chao in Prepared Announcement of Lawsuit against Enron, Former Enron Executives, And Former Enron Retirement Plan Officials, June 26, 2003. 4. Treasury Assistant Secretary for Tax Policy Pam Olson in December 29, 2003 Press Release entitled “Treasury Issues Rules To Increase Transparency and Halt Abusive Tax Avoidance Transactions: Reins Tightened on Lawyers, Accountants, and Other Tax Advisors.” 5. SEC Commissioner Harvey J. Goldschmid, entitled “Mutual Fund Regulation: A Time for Healing and Reform,” before the ICI 2003 Securities Law Developments Conference on December 4, 2003. 6. 3rd Circuit Court Judge Edward Becker in his eloquent dissent in the case of DiFelice v. Aetna. 7. Chief U.S. District Judge J. Patrick Murphy in Cooper et al. v. the IBM Personal Pension Plan et al. (holding that the IBM cash balance plan violated ERISA). 8. Senior Circuit Judge Richard S. Arnold of the U.S. Court of Appeals for the Eighth Circuit in Howard Bashman‘s November edition of “20 Questions for the Appellate Judge” in which Judge Arnold was asked about his most favorite aspect of being a federal appellate judge. 9. “Don’t bumble in pensions jungle“: September 8, 2003 article by Jane Hall, Liverpool Echo, discussing the U.K.’s pension funding woes. 10. Federal District Judge Raymond J. Dearie in the Eastern District of New York case of Straus v. Prudential Employee Savings Plan.