A federal appeals court decision may send defined contribution plan sponsors scurrying to look at their own plan descriptions.
The decision involves Unisys Corp., and is the first court case to consider the application of the Labor Department's Section 404(c) regulation.
The appeals court questioned whether tougher standards in selecting investments and disclosure to participants were needed to protect participants of Unisys' defined contribution plan. Interestingly, Unisys attorneys used 404(c) as part of their defense, yet the investments in question were made before the regulations had been issued. The appeals court reversed a U.S. District Court's January 1995 summary judgment on the case and sent it back to the district court for trial.
In Meinhardt vs. Unisys Corp., the U.S. Court of Appeals for the 3rd Circuit questioned whether fiduciaries to Unisys' defined contribution plan breached their duties when they purchased more than $200 million in GICs from Executive Life. In its defense, Unisys lawyers said even if the company failed to comply with pension law by purchasing Executive Life GICs, Section 404(c) protected it from any liabilities because the participants had control over their investment choices, and therefore were responsible for their own losses.
But the appeals court said there was enough evidence to show the district court was wrong in granting a summary judgment in favor of Unisys.
Affiliated Managers Group is buying quantitative money manager First Quadrant in a cash transaction. Neither side would disclose figures, but analysts put the price between $40 million and $60 million. AMG will buy the firm from Talegen Holdings, a wholly owned subsidiary of Xerox. AMG will be majority partner; management will own a minority stake in the firm, but could increase its ownership eventually to nearly half of the firm.
Pension funds around the world experienced double-digit performance last year. Of six major pension markets, U.S. pension funds did the best, returning an average 25.2%, Callan Associates said. Gains were fueled by the S&P's 36.2% return, and domestic bonds' 18.5% return. U.S. corporate pension funds did the best, because of their higher equity allocations, returning an average 26.1%.
U.K. funds earned an average return of 19.2%, helped by their average 77.5% allocation to stocks, according to The WM Co.
Australian corporate funds returned 18.8%, compared with 17.6% for newer industrywide schemes, according to John A. Nolan & Associates. Canadian plans earned an average 17.3%, Japanese funds gained 13% and Swiss plans, 11%, according to InterSec Research.
International exposure both helped and hampered different countries. U.S. funds gained only 11.2% from international stocks last year, but they provided a 23.4% boost for Japanese pension funds.
Medallion Investment Management has been acquired by Loomis Sayles in a cash transaction. The amount was not available at presstime. Medallion, which manages $180 million in domestic growth equity and fixed income, will remain based in Albuquerque, N.M., and Medallion President Laree Perez will become a Loomis Sayles vice president. As of Feb. 15, the firm will become a satellite office of the Pasadena, Calif., office of Loomis Sayles.
The $140 million Vermont Yankee Nuclear Power Corp. nuclear decommissioning trust, Brattleboro, is undertaking an asset allocation study, said Thomas Schimelpfenig, manager-financial planning.
The fund is looking at boosting its equity target in light of liberalized federal regulations on such trusts. Also, the fund is examining other investment areas. William M. Mercer is assisting in the study, which Mr. Schimelpfenig expects to be completed next month.
The fund now has 10% of total assets in equities, split between a passive fund and active management. The remainder of the fund is in corporate bonds and municipal and Treasury securities.
Some stock managers remain loyal to the technology sector despite the recent disclosure that Fidelity's Magellan Fund sold $10 billion of such stocks in November.
``We'd been a modest seller; now we're a modest buyer,'' said Richard Rubinstein, senior vice president and director of equity research of Oppenheimer Management.
Glenn Fogle, portfolio manager of the $1.6 billion Twentieth Century Vista fund, which already has a 50% allocation to the sector, is not adding to his holdings, but he's not selling either. Larry Marks, managing director of Harbor Capital Management, said he'd hold on to his stock, too, and then add to his technology positions after midyear.
State Mutual Insurance Co., Rome, Ga., hired First Union National Bank of Georgia to manage its $11 million defined benefit plan and $2 million profit-sharing plan, said Robert Strauss, vice president-investments. Both plans will be invested in First Union's Evergreen mutual funds in large/midcap equity, international equity, domestic bond, stable value and money market funds.
Investment management had been in-house