Month: August 2003

Thanks to Be Spacific for shedding some light on the barrage of spam today. You can read more about it at C-Net News.com: “World squirms as Sobig returns” and “‘Good’ worm, new bug mean double trouble.”

Today’s Federal Register contains the prohibited transaction exemption issued by the Department of Labor to the Northwest Airlines pension plans, permitting the in-kind contribution of Pinnacle Airlines stock to the pension plans to satisfy funding obligations. You can read more about it in yesterday’s post and in this article for the New York Times: “U.S. to Allow Northwest Air to Use Stock in Pensions.” Ellen Schultz and Susan Carey for the Wall Street Journal (subscription required) also report: “Northwest Airlines Can Use Stock Of Unit to Fund Retirement Plans.”

Bill Mann for the Motley Fool has this take on the subject: “Underfunded Pension? Just Add Stock.”

The nation’s largest pension fund, the California Public Employees’ Retirement System, imposed new investment standards Monday on the 90 investment banks and broker-dealers with which it does business as reported here by the Associate Press via the Seattle Post-Intelligencer: “U.S.’s largest pension fund has new rules.”

Here’s a great op-ed by Scott Harshbarger for the Boston Globe: “Corporate America’s new accountability.” Quote of note:

Leaders must work to define standards for audit committees, independent directorships, and governance policies, including formal business and ethics codes of conduct, in order to avoid further regulation and bring about lasting reform. Experience has taught us that the best results do not come in a one-size-fits-all box. But that is just what corporate America can expect from federal regulators if its leaders do not rise to the challenge of defining new standards in integrity, transparency, and accountability capable of winning back investor confidence.

The Federal Register.

The Department of Labor announced today that it will permit Northwest Airlines Corp. to contribute stock of an affiliate carrier, Pinnacle Airlines, to its pension plans instead of cash. It is an unusual move by the Department, designed to provide a solution for a struggling airline with an underfunded pension plan. Northwest’s three pension plans have hired an independent fiduciary to establish the fair market value of the Pinnacle stock and to see if the stock is a prudent investment for the plans. The plans cover about 72,850 employees nationwide. The company has obtained a waiver from the Internal Revenue Service to pay about $450 million in 2003 obligations over five years. The following sources report:

• Associated Press via Yahoo! News.com: “Northwest to Fund Pensions with Stock”
• Minneapolis Business Journal: “Northwest allowed to contribute Pinnacle stock to pension plans“

“Firms trim stock’s role in pensions“: Todd Mason for the Knight Ridder Newspapers via the Seattle Times reports.

William Hoffman for the Dallas Business Journal reports: “Company savings plans under watch in courts.” The article discusses the class action lawsuits being filed against companies with 401(k) plans funded with company stock and quotes Karl Nelson, partner in the labor and employment practice group at Gibson Dunn & Crutcher L.L.P. in Dallas, who recently won dismissal of a case brought in Rhode Island against Textron Inc. as saying: “What I’ve been telling folks … is that they need to give some thought to the way their plans are structured and take some prophylactic steps that maybe they weren’t thinking of when stocks were looking up.”

SmartMoney.com is reporting that Morningstar, Inc., a company best known for its independent rating of mutual funds, has started offering professional management of retirement savings for 401(k) participants: “Morningstar to Manage Retirement Savings Plans.”

An interesting article from the Wall Street Journal (subscription required) on search engines–“Google Is Most Popular Search Site, But Others Sometimes Do It Better“–mentions a search engine I had not heard of called Teoma. According to the article, the search engine is built around finding the Web “communities” around a particular topic. I tried it and found it to be very helpful.

Today’s Federal Register.

The Wall Street Journal today shows in this article–“Massive Blackout Retreats Stubbornly in U.S., Canada: ‘Cascade’ of Problems Appears To Be the Worst Since 1996“–that Pennsylvania was affected by the power outage. But fortunately, we did not experience any outage here. I am sure that many of my readers did.

Also on the power outage, Renee Deger for the Recorder via Law.com reports: “Zapped by Outage, Firms Scramble to Cope.”

On pension funding, the Wall Street Journal today reports: “Gloom Lifting for Pension Plans.” The article discusses how the “sudden summer upturn in interest rates, combined with the improving stock market” has had a powerful effect on pension plan funding. The article reports that a “one percentage-point change in long-term yields easily can shrink or inflate a company’s pension liability by 10% or more” and that the “bellwether 10-year Treasury note has soared nearly 1.5 percentage points since June.”

Who will pay for this $4 million tab? The retirement plans or Enron? “Payment sought for pension work: At question is who pays the $4 million for plan management“: Eric Berger for the Houston Chronicle reports.

There are quite a few articles today covering developments in the attorney-client privilege arena:

“IRS Case tests Attorney-Client Privilege“: the Washington Post reports. The article quotes Lawrence J. Fox, a Philadelphia lawyer and former chair of the American Bar Association’s ethics committee, as saying, “It is my view that any time the identity of the client carries with it more information than [just] the identity of the client, then there is an obligation on the part of the law firm to refuse to turn it over.” Mr. Fox, according to the article, called the Jenkens & Gilchrist summonses “the very worst form” of that since it is clear that obtaining the names would allow the agency to identify potential audit targets.

Accountingweb.com also reports: “IRS Strikes Blow Against Attorney-Client Privilege.”

Steve Pearlstein for the Washington Post had this to say about recent developments regarding the attorney-client privilege: “[T}here are real downsides in terms of erosion of the attorney-client privilege in requiring or allowing lawyers to rat on their clients except in the rarest of circumstances. I’m not sure the costs in terms of that erosion are offset by the marginal benefits you get when you go from reporting up to reporting out.” You can access his comments here.

Another op-ed for the Nashville City Paper–“Attorney-client privilege quickly slipping away“–makes the point that the old cliche of “throwing the baby out with the bath water” might well apply here.

The U.S. District Court for the District of Columbia denied the Federal Trade Commission’s motion to dismiss a lawsuit by the New York State Bar Association and the American Bar Association challenging the applicability of the Gramm-Leach-Bliley Act (“GLBA”) to lawyers in private practice and held that “it does not appear that Congress intended for the GLBA’s privacy provisions to apply to attorneys.” You can read the decision here. The court also had some harsh words for the FTC:

In addition, it also appears on the record now before the Court, that the FTC’s failure to provide sufficient reasoning to support its interpretation that attorneys are subject to the GLBA, raises concerns regarding whether the decision amounted to arbitrary and capricious agency action. Finally, even if the GLBA is applicable to attorneys engaged in the practice of law, it appears that the FTC failed to consider whether attorneys are entitled to a de minimis exemption under the GLBA, which if proven to be the case, would also amount to arbitrary and capricious agency action.

Great article on an interview with a well-known blogger and law professor, Glenn Reynolds, of InstaPundit who, during the the war in Iraq, reportedly built his “circulation” up to 220,000 visits a day. (Thanks to Robert Ambrogi at LawSites.com for the link.)

Robert Ambrogi for LawSites refers us to a great site called On the Docket. Mr. Ambrogi writes:

On the Docket, a project of Northwestern University’s Medill School of Journalism, offers a journalist’s perspective on the Supreme Court. The site lists pending and prior-term cases, with a story on each case, additional feature stories on selected cases, links to Web sites relevant to the cases, information provided by attorneys and parties in the cases, the dates for scheduled oral arguments, the questions presented to the court, names of the attorneys in the cases, and citations for the lower court opinions.