Compliance August 23, 2011

PwC Denied Summary Judgment on Whipsaw Calculation Claim

PricewaterhouseCoopers (PwC) was unable to prove that its calculation of benefits for cash balance plan participants satisfied the Employee Retirement Income Security Act (ERISA), a court found.
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In Laurent v. PricewaterhouseCoopers LLP, former participants of the firm’s Retirement Benefit Accumulation Plan (RBAP) argued their distributions using a whipsaw calculation improperly used the 30-year Treasury rate to project their benefits to age 65 when a set rate between 7% and 9% would have been more accurate. Under ERISA, a whipsaw calculation must use a “fair estimate” of the rate of return an average participant would have received had he remained in the plan until normal retirement age to project benefits to that age then pay out benefits at the present value of that projection. 

District Judge George B. Daniels of the U.S. District Court for the Southern District of New York found that PwC’s expert witness did not offer proof that the 30-year Treasury rate was a “fair estimate” of the rate of return an average participant would have received. PwC argued the participants’ proposed rate ignored the degree of risk associated with future credits to their accounts, and contended that the only reasonable projection rate is a rate no greater than the risk-free rate of return such as the Treasury rate. 

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However, Daniels noted the expert witness never quantified the risk-free rate of return as being equivalent to the Treasury rate, and the expert focused on the question of today’s worth of the current account balance instead of the future worth of the current account balance.Daniels pointed out the expert concluded under no circumstances can the plan participant be entitled to more than his current account balance. Daniels said a required proper whipsaw calculation provides that a plan participant is entitled to the future account balance discounted back to present value regardless of whether that exceeds the current account balance.
 
The judge concluded PwC’s evidence does not show that there is no genuine dispute as to any material issue of fact and it is entitled to summary judgment as a matter of law.

Deals & People August 23, 2011

Natixis Announces Americas Platform Additions

As part of the expansion of its Americas platform, Natixis has announced senior appointments in its Fixed Income, Commodities & Treasury (FICT) Americas team.
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Denis (Guy) Prouteau joins in New York as Head of FICT.  He has 25 years of experience in trading, sales, and debt capital markets, and previously held senior positions in New York, London, and Paris, most recently as Co-Head of Sales for FIC&T of Natixis Paris. Prior to joining Natixis, Prouteau worked at Crédit Lyonnais, Deutsche Bank, SG Warburg, and BNP Paribas. He is a graduate of the French Business School EDHEC.

Andrew Schaeffer joins Corporate and Investment Banking (CIB) Americas as Head of the newly formed Credit Platform, comprised of debt instrument structuring, syndication, trading, research and distribution. He brings more than twenty years of financial services experience to the position, most recently as Head of Debt Capital Markets Credit Sales & Trading at Crédit Agricole. He previously worked at Bank of New York, Barclays Capital, and DLJ, among others. Schaeffer earned his MBA from NYU Stern School of Business.

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Grégory Fage was named Head of FX, Interest Rate Derivatives (IRD), and Money Market Sales for FICT Americas. He will be responsible for further expanding Natixis’ customer reach and product offerings in these markets. He has fifteen years of experience at Crédit Agricole Corporate Investment Bank, most recently as Managing Director, Head of FX Sales – Americas in New York. Fage is a graduate of Ecole Supérieure de Commerce de Paris.

“These appointments mark an important step in building the backbone for coverage of US, Canadian, and Latin American corporate and institutional clients across a whole range of FICT products, commented Yann Gindre, CEO Natixis CIB Americas.

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