Compliance May 8, 2008

EBSA Studies 403(b) Orphan Contract Problem

A top Department of Labor (DoL) benefits regulator on Thursday revealed that the agency is studying ways to help 403(b) plan sponsors better deal with the difficult problem of getting an exact accounting of their orphan contracts.
Reported by

Scott C. Albert, Chief of the Division of Reporting Compliance at the Employee Benefits Security Administration (EBSA), gave that information in a Webinar discussing employee benefit plan reporting requirements.

With new 403(b) Form 5500 requirements becoming effective for the 2009 plan year, Albert noted the difficulty many plan sponsors are having tracking down all contracts between annuity providers and participants including those involving former employees. Albert said plan sponsors will be expected to “make a good faith effort to track them down.”

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403(b) sponsors attending PLANSPONSOR‘s recent 403(b) Summit heard a series of discussions about how, in many cases, providers are refusing to give plans the details of the contract that may be executed by the provider directly with the participant.

While 403(b) sponsors generally are having to shoulder a significantly heavier regulatory burden with the recent imposition of new government regulations, Albert pointed out that the due date for the Form 5500 report is not until July 31, 2010, and can be extended to October 15. Offered Albert: “There is plenty of time to prepare.”

The presentation from Thursday’s Webinar is available here.

Products May 8, 2008

Morgan Stanley Launches Two Euro ETNs

Morgan Stanley will issue two exchange-traded notes (ETNs), which aim to provide leveraged directional exposure to the euro/U.S. dollar exchange rate.
Reported by

The Double Long Euro ETN (ticker: URR) is designed to offer an investable alternative to a two-times leveraged, long investment in the euro. That means for every 1% strengthening of the euro relative to the U.S. dollar, the level of the index will generally increase by 2%, while for every 1% weakening of the euro relative to the U.S. dollar, the index will generally decrease by 2%, Morgan Stanley said.

The underlying index is the Double Long Euro Index (ticker: DLONGEUR), which was developed by Morgan Stanley and is maintained by Standard & Poor’s.

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The Double Short Euro ETN (DRR) is designed to offer an investable alternative to a two-times leveraged, short investment in the euro. That means for every 1% weakening of the euro relative to the U.S. dollar, the level of the index will generally increase by 2%, while for every 1% strengthening of the euro relative to the U.S. dollar, the index will generally decrease by 2%. The underlying index is the Double Short Euro Index (ticker: DSHRTEUR), Morgan Stanley said.

The two ETNs will be traded on the NYSE Arca.

For more information, go to www.marketvectorsETNs.com.

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