Compliance October 3, 2008

Stock-Drop Plaintiffs Win Skirmishes in Fifth Third Case

Plaintiffs in a January 2005 stock-drop and excessive fee case have won two legal skirmishes with a federal judge’s rulings certifying the case as a class action and refusing a request to throw out the lawsuit.
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A news release from the Scott and Scott law firm said the rulings came in a suit filed by Benjamin Shirk seeking to represent participants and beneficiaries in the Fifth Third Master Profit Sharing Plan. The case charged the bank and a number of its executives with mismanaging the plan and breaching their fiduciary duties under the Employee Retirement Income Security Act (ERISA).

Specifically, the suit alleges defendents breached their fiduciary duties by:

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  • investing the plan’s assets in Fifth Third stock at a time when it was imprudent to do so;
  • making material misrepresentations about Fifth Third stock and failing to provide complete and accurate information to participants and beneficiaries;
  • failing to monitor those persons or entities who were charged with managing the plan and its assets;
  • failing to avoid conflicts of interest with respect to the plan.

The plaintiffs also alleged the plan was charged excessive management fees—a claim the court refused to throw out in the recent rulings. The order refusing to dismiss the excessive fee allegations is here.

The bank was the target of a new stock-drop case filed in mid-August by a Fifth Third employee in Florida (see Fifth Third Slapped with Stock-Drop Participant Lawsuit).

The Markets October 3, 2008

Wilmington Trust to Participate in Treasury Guarantee Program

Wilmington Trust announced on Friday that the Board of Trustees of its mutual fund family, the Wilmington Funds, authorized participation in the U.S. Treasury Department’s new Temporary Money Market Guarantee Program.
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Through this program, the U.S. Treasury will guarantee the share price of any eligible money market mutual fund—whether retail or institutional—that applies for and pays a fee to participate in the program (see Treasury Opens Guarantee Program for Money Funds).

The three participating Wilmington Funds are the Wilmington Prime Money Market Fund, the Wilmington U.S. Government Money Market Fund, and the Wilmington Tax-Exempt Money Market Fund.

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“We remain confident in the stability of our money market funds but would like to provide additional reassurance for shareholders who may have concerns in light of the extraordinary events of the last few weeks,” said John J. Kelley, president of the Wilmington Funds, in the announcement.

UBS (see UBS to Apply for Money Market Guarantee Program), Morgan Stanley (see MSIM Signs Up for Treasury Guarantee Program), and Putnam (see Putnam Signs Up for Money Fund Guarantee Program) have also decided to participate in the program.

The temporary guarantee program provides coverage to shareholders for amounts that they held in participating money market funds as of the close of business on September 19. The guarantee will be triggered if a participating fund’s net asset value falls below $0.995, commonly referred to as “breaking the buck.” While the program protects the accounts of investors, each money market fund makes the decision to sign up for the program. Investors cannot sign up for the program individually.

A list of Frequently Asked Questions (FAQ) about the Treasury Department’s Temporary Guarantee Program for Money Market Funds, a program that will guarantee the share price of any publicly offered eligible money market mutual fund, is availalbe here.

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