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Cypen & Cypen
NEWSLETTER
for
JANUARY 9, 2004

Stephen H. Cypen, Esq., Editor

Never Forget - September 11, 2001

1. EBSA GRANTS EXEMPTION FOR RELEASE OF CLAIMS AND EXTENSIONS OF CREDIT IN CONNECTION WITH LITIGATION:
The Employee Benefits Security Administration, Department of Labor, on December 31, 2003 granted a class exemption for the release of claims and extensions of credit in connection with litigation. The exemption provides retroactive and prospective relief from certain prohibited transaction restrictions of ERISA (and from certain taxes imposed by the Internal Revenue Code), as follows: (1) release by the plan or by a plan fiduciary of a legal or equitable claim against the party in interest exchanged for consideration given by, or on behalf of, a party in interest to the plan in partial or complete settlement of the plan’s or the fiduciary’s claim; and (2) an extension of credit by a plan to a party in interest in connection with a settlement whereby the party in interest agrees to repay, over time, an amount owed to the plan in settlement of a legal equitable claim by the plan or a plan fiduciary against the party in interest. The exemption is conditioned upon the existence of a genuine controversy involving the plan, unless the case has been certified as a class action by the court. On a prospective basis (after January 30, 2004), the existence of a genuine controversy must be determined by an independent attorney retained to advise the plan, unless the case has been certified as a class action by the court. Prohibited Transaction Exemption 2003-39 (Application No. D-11100). Federal Register: December 31, 2003 (Volume 68, Number 250, Pages 75632-75640).

2. MIAMI GETS SOME GOOD PRESS...FINALLY:
In its January 2004 issue, Governing has a very positive piece on the City of Miami, subtitled “Infamous for living ‘la vida loca,’ Miami now answers to a business beat.” Featuring Miami’s new rule -- Commissioner Johnny Winton, Mayor Manny Diaz and City Manager Joe Arriola -- the article recognizes the ample signs of real recovery. Downtown is enjoying its biggest building boom in decades. Crime has come down and stayed down. The City’s bond rating has been upgraded from junk to investment grade. The State Fiscal Oversight Board put in place in the wake of 1996's debt crisis has been disbanded. And, most recently, by handling potentially-volatile Free Trade of the Americas demonstrations reasonably well, Miami helped boost its prospects in the international competition to be the FTAA’s ultimate headquarters. Whether the City can avoid the headlines of the past and continue to focus on the business of running a government on the move depends to a large extent on how much influence Winton and Diaz can continue to bring to bear on the City Commission, and whether Arriola can be a force for reason and cohesion, if not always peace. But one thing is clear in this scandal-worn southeast city by the Bay: every day without a scandal is, indeed, a good day.

3. WILL THE “SUPER BOWL THEORY” HOLD TRUE THIS YEAR?:
Hard to believe, but it’s been almost seven years since we talked about the “Super Bowl Predictor Theory.” (See C&C Newsletter for February, 1997, Page 1.) The Super Bowl Predictor Theory holds that the United States stock market will end the year up if a team from the original National Football League wins the Super Bowl and will close down if a team from the old American Football League wins. Out of 37 times, the theory has proved correct 30 times. (Since we wrote the first piece, however, the theory’s record is only a dismal 3-4).

4. NUMBER OF DIVIDEND INCREASES DECLINES:
A report from Plansponsor.com indicates that there was a 9.3% drop in the number of December 2003 dividend increases among publicly-owned companies, compared to December 2002. Standard & Poor’s said that from the 7,000 public companies reporting statistics, there were 136 dividend hikes. A year ago, there were 150 such dividend increases. However, extra dividends for December 2003 totaled almost 200, nearly a 100% increase from the previous December and the greatest number of extra payments in December since 1989. S&P data also show ten unfavorable dividend actions last month, the same as in the previous year. On a year-to-date basis, there were 1,630 dividend increases, a 14.4% increase over 2002. Nevertheless, the total number of 2003 dividend increases remains about 8% below the ten-year average of 1,767.

5. FRAUD VERDICTS INCREASE ALMOST 1000%!:
Juries in this country awarded damages totaling $13.8 Billion last year against companies sued for fraud, up from $1.46 Billion in 2002, according to a Bloomberg Survey reported by the Daily Business Review. The fraud judgments, accounting for 9 of the 25 largest awards last year, apparently reflected juror anger about corporate wrongdoing disclosed since the collapse of Enron. There were 8 corporate fraud verdicts in the top 25 in 2002, up from only 1 the year before. The rise in fraud verdicts is prompting some companies to settle before trial, rather than risk large awards. However, the cost of settling has also risen by as much as 50%, according to attorneys who defended fraud suits. The largest fraud verdict was against Exxon Mobil for $11.9 Billion in an action brought by Alabama Department of Conservation & Natural Resources. Ironically, the huge verdict came after a retrial, which resulted from Exxon Mobil’s appeal from a previous $3.5 Billion award. A classic case of “be careful what you wish for.”

6. MEMBER ON REGIONAL PLANNING COUNCIL (STILL) SUBJECT TO DUAL OFFICE HOLDING PROHIBITION:
Adhering to prior formal opinions, the Florida Attorney General has held that membership on a Regional Planning Council constitutes an office for purposes of the constitutional prohibition against dual office holding contained in Article II, Section 5(a), Florida Constitution. It was urged that Regional Planning Councils were exempt from the constitutional provision as statutory bodies having only advisory powers. However, as in his prior formal opinions, the Attorney General relied upon court decisions holding that members of a Regional Planning Council were public officers within the meaning of Florida’s Resign-to-Run Law. Nevertheless, the Attorney General again suggested that the legislature may wish to clarify the status of Regional Planning Councils and their officers. Florida Attorney General Informal Legal Opinion dated October 29, 2003.

7. THIS GUY MAY BE QUALIFIED TO RUN FOR VICE PRESIDENT:
Sheriff’s deputies have arrested a subject who apparently is not too swift. James Egan allegedly robbed a convenience store at gunpoint. Understandably, he took great care to conceal his identity by covering his face with a blue bandanna and wearing a knit hat and gloves. After the stickup, he ran into the back yard of a nearby home, throwing out all allegedly incriminating items: bandanna, gloves, hat, .357 Magnum and his jacket, which, unfortunately for him, also contained his county jail property identification card. Ah, the easier to send you back, my dear Fellow. As always, these whimsical reports come from Associated Press.


Copyright, 1996-2004, all rights reserved.

Items in this Newsletter may be excerpts or summaries of original or secondary source material, and may have been reorganized for clarity and brevity. This Newsletter is general in nature and is not intended to provide specific legal or other advice.


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