1.
EBSA GRANTS EXEMPTION FOR RELEASE OF CLAIMS AND EXTENSIONS OF CREDIT
IN CONNECTION WITH LITIGATION:
The Employee Benefits Security Administration, Department
of Labor, on December 31, 2003 granted a class exemption for the release
of claims and extensions of credit in connection with litigation. The exemption
provides retroactive and prospective relief from certain prohibited transaction
restrictions of ERISA (and from certain taxes imposed by the Internal Revenue
Code), as follows: (1) release by the plan or by a plan fiduciary of a
legal or equitable claim against the party in interest exchanged for consideration
given by, or on behalf of, a party in interest to the plan in partial or
complete settlement of the plan’s or the fiduciary’s claim;
and (2) an extension of credit by a plan to a party in interest in connection
with a settlement whereby the party in interest agrees to repay, over time,
an amount owed to the plan in settlement of a legal equitable claim by
the plan or a plan fiduciary against the party in interest. The exemption
is conditioned upon the existence of a genuine controversy involving the
plan, unless the case has been certified as a class action by the court.
On a prospective basis (after January 30, 2004), the existence of a genuine
controversy must be determined by an independent attorney retained to advise
the plan, unless the case has been certified as a class action by the court.
Prohibited Transaction Exemption 2003-39 (Application No. D-11100). Federal
Register: December 31, 2003 (Volume 68, Number 250, Pages 75632-75640).
2. MIAMI
GETS SOME GOOD PRESS...FINALLY:
In its January 2004 issue, Governing has a very positive piece on the
City of Miami, subtitled “Infamous for living ‘la vida
loca,’ Miami now answers to a business beat.” Featuring
Miami’s new rule -- Commissioner Johnny Winton, Mayor Manny Diaz
and City Manager Joe Arriola -- the article recognizes the ample signs
of real recovery. Downtown is enjoying its biggest building boom in
decades. Crime has come down and stayed down. The City’s bond
rating has been upgraded from junk to investment grade. The State Fiscal
Oversight Board put in place in the wake of 1996's debt crisis has
been disbanded. And, most recently, by handling potentially-volatile
Free Trade of the Americas demonstrations reasonably well, Miami helped
boost its prospects in the international competition to be the FTAA’s
ultimate headquarters. Whether the City can avoid the headlines of
the past and continue to focus on the business of running a government
on the move depends to a large extent on how much influence Winton
and Diaz can continue to bring to bear on the City Commission, and
whether Arriola can be a force for reason and cohesion, if not always
peace. But one thing is clear in this scandal-worn southeast city by
the Bay: every day without a scandal is, indeed, a good day.
3.
WILL THE “SUPER BOWL THEORY” HOLD TRUE THIS YEAR?:
Hard to believe, but it’s been almost seven years since we talked about
the “Super Bowl Predictor Theory.” (See C&C Newsletter for February,
1997, Page 1.) The Super Bowl Predictor Theory holds that the United States stock
market will end the year up if a team from the original National Football League
wins the Super Bowl and will close down if a team from the old American Football
League wins. Out of 37 times, the theory has proved correct 30 times. (Since
we wrote the first piece, however, the theory’s record is only a dismal
3-4).
4.
NUMBER OF DIVIDEND INCREASES DECLINES:
A report from Plansponsor.com indicates that there was a 9.3% drop in the number
of December 2003 dividend increases among publicly-owned companies, compared
to December 2002. Standard & Poor’s said that from the 7,000 public
companies reporting statistics, there were 136 dividend hikes. A year ago, there
were 150 such dividend increases. However, extra dividends for December 2003
totaled almost 200, nearly a 100% increase from the previous December and the
greatest number of extra payments in December since 1989. S&P data also show
ten unfavorable dividend actions last month, the same as in the previous year.
On a year-to-date basis, there were 1,630 dividend increases, a 14.4% increase
over 2002. Nevertheless, the total number of 2003 dividend increases remains
about 8% below the ten-year average of 1,767.
5.
FRAUD VERDICTS INCREASE ALMOST 1000%!:
Juries in this country awarded damages totaling $13.8 Billion last year against
companies sued for fraud, up from $1.46 Billion in 2002, according to a Bloomberg
Survey reported by the Daily Business Review. The fraud judgments, accounting
for 9 of the 25 largest awards last year, apparently reflected juror anger about
corporate wrongdoing disclosed since the collapse of Enron. There were 8 corporate
fraud verdicts in the top 25 in 2002, up from only 1 the year before. The rise
in fraud verdicts is prompting some companies to settle before trial, rather
than risk large awards. However, the cost of settling has also risen by as much
as 50%, according to attorneys who defended fraud suits. The largest fraud verdict
was against Exxon Mobil for $11.9 Billion in an action brought by Alabama Department
of Conservation & Natural Resources. Ironically, the huge verdict came after
a retrial, which resulted from Exxon Mobil’s appeal from a previous $3.5
Billion award. A classic case of “be careful what you wish for.”
6.
MEMBER ON REGIONAL PLANNING COUNCIL (STILL) SUBJECT TO DUAL OFFICE
HOLDING PROHIBITION:
Adhering to prior formal opinions, the Florida Attorney General has held that
membership on a Regional Planning Council constitutes an office for purposes
of the constitutional prohibition against dual office holding contained in Article
II, Section 5(a), Florida Constitution. It was urged that Regional Planning Councils
were exempt from the constitutional provision as statutory bodies having only
advisory powers. However, as in his prior formal opinions, the Attorney General
relied upon court decisions holding that members of a Regional Planning Council
were public officers within the meaning of Florida’s Resign-to-Run Law.
Nevertheless, the Attorney General again suggested that the legislature may wish
to clarify the status of Regional Planning Councils and their officers. Florida
Attorney General Informal Legal Opinion dated October 29, 2003.
7.
THIS GUY MAY BE QUALIFIED TO RUN FOR VICE PRESIDENT:
Sheriff’s deputies have arrested a subject who apparently is not too swift.
James Egan allegedly robbed a convenience store at gunpoint. Understandably,
he took great care to conceal his identity by covering his face with a blue bandanna
and wearing a knit hat and gloves. After the stickup, he ran into the back yard
of a nearby home, throwing out all allegedly incriminating items: bandanna, gloves,
hat, .357 Magnum and his jacket, which, unfortunately for him, also contained
his county jail property identification card. Ah, the easier to send you back,
my dear Fellow. As always, these whimsical reports come from Associated Press.
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