The Markets November 26, 2008

Mutual Fund Assets Plunge in October

The combined assets of the nation's mutual funds decreased by $1.087 trillion, or 10.2%, to $9.6 trillion in October, according to the Investment Company Institute (ICI).
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Long-term funds—stock, bond, and hybrid funds—had a net outflow of $126.85 billion in October, versus an outflow of $63.82 billion in September (see Funds See September Asset Drop).

Stock funds posted an outflow of $72.29 billion in October, compared with an outflow of $56.36 billion in September, according to ICI data. Among stock funds, world equity funds (U.S. funds that invest primarily overseas) posted an outflow of $24.96 billion, while funds that invest primarily in the U.S. had an outflow of $47.32 billion.

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Hybrid funds posted an outflow of $13.97 billion in October, compared with an outflow of $6.49 billion in September.

Bond funds experienced an asset drop of $40.59 billion in October, compared with an outflow of $973 million in September. Taxable bond funds had an outflow of $32.22 billion, and municipal bond funds had an outflow of $8.38 billion.

Only money market funds had an inflow in October ($142.14 billion), a turnaround from an outflow of $87.57 billion in September. Funds offered primarily to institutions had an inflow of $120.06 billion, while funds offered primarily to individuals had an inflow of $22.08 billion.

Compliance November 26, 2008

DoL Accuses North Dakota Firm of Diverting 401(k) Funds

The U.S. Department of Labor (DoL) has accused a Bismarck, North Dakota, manufacturer of wastewater treatment systems and equipment and its owners of diverting employee deferrals and loan repayments from its 401(k) plan.
Reported by

The DoL leveled the accusations against LAS International and its owners in a lawsuit that also included a charge of failing to forward $39,866.18 in delinquent employee and employer contributions.

A DoL news release said the suit alleges that LAS and individual defendants Neil Whittey and Syver Vinje violated the Employee Retirement Income Security Act (ERISA) when they failed to forward mandatory employer contributions, employee contributions, and loan repayments owed to the plan for 2004 and 2005. The defendants are accused of using the assets for their benefit.

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Regulators ask in the suit that a judge require the defendants to restore all losses and foregone earnings, and require Whittey and Vinje to waive any rights to their 401(k) accounts to offset any losses owed to the plan.

As of December 2006, the latest data available, the 401(k) plan covered 32 participants and had $144,749 in assets.

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