Compliance December 8, 2009

U.S. Sugar Agrees to $16M-Settlement of ERISA Claims

Clewiston, Florida-based U.S. Sugar has agreed to pay $15.9 million to settle a breach of fiduciary duty lawsuit brought by 4,000 current and former employees, BLR reported.

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The suit alleged the company and its top executives violated the Employee Retirement Income Security Act (ERISA) by trying to deprive shareholders of their right to sell shares of company stock on two occasions when U.S. Sugar was pondering buyout offers, and by significantly undervaluing shares held in the company’s employee stock ownership plan (ESOP).

In April, U.S. District Judge Donald M. Middlebrooks of the U.S. District Court for the Southern District of Florida dismissed the employees’ claims, saying they did not exhaust all of their administrative remedies and that they could not claim an ERISA fiduciary breach because they held the shares in an ESOP and not directly (see “Judge Dismisses Most of U.S. Sugar ERISA Breach Suit“).

U.S. Sugar did not admit to any wrongdoing, but said it settled the suit to avoid further legal proceedings.

Compliance December 8, 2009

DoL Set to Issue Annuity Project RFI

In implementing its newly announced initiative to see how it can best facilitate the use of lifetime income investment vehicles in retirement plans, the U.S. Department of Labor (DoL) plans to release a formal request for information document in January.

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A fact sheet posted on the agency’s Web site said the RFI will have “37 specific questions designed to obtain focused commentary to help EBSA (Employee Benefits Security Administration) make its determinations” about guaranteed income annuities or similar investment products. The RFI will be co-sponsored by the Treasury Department.

The DoL document points out that the trend away from defined benefit, which pay out via annuities, to defined contribution plans, which pay out in lump sums, means “employees rather than employers are increasingly responsible for the adequacy of their retirement savings.”

Labor officials first unveiled the annuity initiative yesterday during the beginning of a series of Web chat sessions to discuss the agency’s regulatory agenda. Secretary Hilda L. Solis kicked the sessions off with an overview and also answered live questions submitted by e-mail or via the DoL site (see “DoL Discusses Lifetime Annuity Income Project”).

A similar session by Assistant Secretary of Labor Phyllis C. Borzi, the head of EBSA, is scheduled for Wednesday at 10 a.m. (see “EBSA to Unveil Regulatory Agenda”).

A DoL document summarizing its major regulatory goals is available here.

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