Final SEC Rule Regarding Listing Standards for Compensation Committees and Amendment to Proxy Disclosure Rules
The SEC issued a Final Rule, as required by the Dodd-Frank Act, that requires securities exchanges to adopt listing standards to address the independence of compensation committee members and the committee’s authority to retain compensation advisers, consideration of the independence of compensation advisers, and responsibility for the appointment, compensation and oversight of the work of any compensation adviser. Each national securities exchange and national securities association must provide the SEC its proposed rule changes that comply with the Final Rule no later than 90 days after the Final Rule’s publication in the Federal Register. Each national securities exchange and national securities association must have final rules or rule amendments that comply with the Final Rule approved by the SEC no later than one year after publication in the Federal Register. Once an exchange’s new listing standards are in effect, a listed company must meet the standards in order for its… Continue Reading
The IRS issued proposed regulations allowing an employer in bankruptcy to amend its pension plan to eliminate a lump-sum distribution or other accelerated payment option. Under the proposed rules, four conditions must be satisfied: (i) the plan’s enrolled actuary must certify that the plan’s adjusted funding target attainment percentage is less than 100 percent; (ii) the plan must not permitted to make any “prohibited payments,” (iii) the bankruptcy court must issue an order stating that the adoption of the amendment is necessary to avoid a distress termination or an involuntary termination of the plan prior to completion of the bankruptcy case; and (iv) the PBGC must issue a determination that the amendment is necessary to avoid a distress or involuntary termination of the plan prior to completion of the bankruptcy case and that the plan assets are not sufficient for guaranteed benefits. The preamble to the proposed regulations states that… Continue Reading
The decision is in and can be found here: http://www.supremecourt.gov/opinions/11pdf/11-393c3a2.pdf We are still reading through the opinion, and will provide a more in-depth analysis soon. In the meantime, the short of it is that the individual mandate has been upheld and group health plans need to continue to comply with PPACA.
New Zealand’s Financial Markets Authority (“FMA”) recently issued guidance setting forth the criteria against which FMA will assess the reasonableness of performance fees for purposes of KiwiSaver schemes and outlining the requirements for disclosure of these fees. Under the guidance, performance fees should only be charged in limited circumstances such as actively managed growth funds and must take account of the effective allowance already in the base fee for an element of active management. The FMA indicated it looks for the following elements related to performance fees: hurdle rate of return with an appropriate benchmark; high water mark (with no resets); crystallisation periods of not less than a year; and a performance fee cap. Managers and trustees for KiwiSaver schemes should review the performance fees charged to their schemes in light of this new guidance. The guidance can be found here.
In Advisory Opinion 2012-02A, the U.S. Department of Labor advised that a Code Section 403(b) Plan will be subject to ERISA if an employer’s contributions to a Code Section 401(a) plan are contingent upon the employee’s contributions to the 403(b) Plan. Specifically, the 403(b) plan would no longer satisfy the safe harbor exemption from ERISA in 29 C.F.R. 2510.3-2(f) which requires participation of employees to be completely voluntary and limits employer involvement. Advisory Opinion 2012-02A can be found here.
NLRB’S General Counsel Releases New Social Media Report Containing Much Needed Guidance on Lawful Social Media Policies
For the second time this year, the office of the National Labor Relations Board’s acting general counsel Lafe Solomon has released a report summarizing how his office has addressed various complaints relating to social media policies, or disciplinary actions taken in response to employee social media activity. As this report shows, the Board’s focus in social media cases remains whether a policy or disciplinary action violates the rights afforded to employees by Section 7 of the National Labor Relations Act (“NLRA”), including the right to “engage in . . . concerted activities for the purposes of collective bargaining or other mutual aid and protection.” In an effort to protect these rights, the Board has filed numerous complaints against employers whose social media policies may “reasonably” be read to restrict employee’s rights to discuss their terms and conditions of their employment online with co-workers or other third parties. This ambiguous standard has led… Continue Reading
After a widely-publicized, disappointing initial public offering, Facebook may be a bit more sensitive about its intellectual property and protecting the company’s value. While unquestionably the top dog in social media, the company faces increased competition in an expanding social media market. To dethrone Facebook, however, an emerging social media company must convince loyal Facebook users to either split time between two social media sites or to make a complete switch from Facebook. Most users are reluctant to even flirt with change because of the multitude of photos and data stored over their years on Facebook, as well as the base of “friends” accumulated. It would simply require too much time and effort to rebuild their social media presence on a new site. Recognizing a market for those who would like to switch to a Facebook-esque social media site, like Google+, third-parties create apps and tools to make the transition… Continue Reading
Just when it looked like Facebook was set to be the next big thing in service of legal process, one federal court is having none of it. In an order dated June 7, 2012, U.S. District Judge John Keenan denied a request by Chase Bank to use Facebook to serve legal process on an alleged identity thief, according to this report at paidContent. In February, we discussed how a British High Court judge had allowed service of process via Facebook in a commercial dispute. And we asked: Will U.S. courts follow? The answer, at least in this case in the Southern District of New York, is forget about it. Instead, the court instructed the Chase Bank to use the decidedly old-media method of placing ads in local newspapers in and around the town of Hastings, New York. “A local newspaper is the most likely means by which to apprise [the… Continue Reading
The U.S. Court of Appeals for the Fifth Circuit recently reversed a district court’s grant of summary judgment in a case involving a suit to recover health insurance benefits under a health plan governed by ERISA. In the case, the insurer refused to reimburse the plaintiff for care received from a specialist outside of the HMO to whom she had been referred by a physician in the HMO. The insurer denied the claim because the referral was not pre-authorized. The district court held that the insurer did not abuse its discretion in denying coverage. On review, the Fifth Circuit determined that the terms of the plan with respect to pre-authorization requirements were ambiguous and the need for pre-authorization was not clearly stated in the certificate of coverage which served as the plan’s summary plan description (“SPD”). Accordingly, the Fifth Circuit held that it could not be held, as a matter… Continue Reading
In a recent decision, the Texas Supreme Court held that an insurer’s sale of stop-loss insurance to a self-funded group health plan is subject to taxes and other regulatory requirements under the Texas State Insurance Code (“Code”). The court of appeals previously held that the employer’s self-funded group health plan was an insurer under the Code and thus the plan’s purchase of stop-loss insurance was reinsurance that was beyond the regulatory scope of the Texas Department of Insurance. The insurer argued that stop-loss insurance fell within the Code’s exception for reinsurance, but the Supreme Court reversed the decision of the court of appeals and found that stop-loss insurance sold to the self-funded employee health plan is not reinsurance, but rather direct insurance subject to regulation under the Code. Texas Dept. of Insurance v. American National Insurance Co., No. 10-0374 (Tex. May 18, 2012).