Stephen H. Cypen, Esq., Editor

1.      CITY WORKERS DESERVE “LAVISH” PENSIONS:   Maybe those defined benefit pensions are not so lavish after all, writes John McCarron in the December 28, 2010 edition of the Chicago Tribune. Maybe there are some jobs so dangerous, so demanding of steady nerves and sound judgment under pressure, that the men and women who work them deserve the benefit of our doubts. Even when times are tough, even when most of us can only wish we could retire at age 50 with 75 percent of pay, maybe we should take a deep breath, dial down the envy and just say:  "Thanks, guys.  You deserve every penny." Chicago firefighters Edward Stringer and Corey Ankum will never get to enjoy their retirements or their defined benefit pensions.  Their lives were cut short after they dashed into a fire-compromised building to look for survivors, only to become victims themselves when a truss roof collapsed.  More than a dozen other firemen were injured, two seriously. Stringer and Ankum died as heroes, and the collective heart of Chicagoland goes out to their families.  Ankum was the father of three, including a 1-year-old. Stringer was older, divorced with a grown daughter.  He liked to ride his motorcycle, walk his beagle and, when the need arose, mow his neighbor's lawn and shovel her walkway. Point is, the biggest problem McCarron had that day, besides writing his column, was finding the bad bulb on a dysfunctional string of Christmas tree lights. How about you?  Were you hustling to get a year-end report written before Christmas break?  Or wading through shoppers looking for that perfect something for that certain someone? Fact is, most of us do not have to dash into a still-smoldering building by dawn's early light to see if there's someone lying lifeless in the black soot.  Or, for that matter, approach a darkened automobile pulled over on the shoulder of a lonely expressway at 3 in the morning. So while we may joke about cops' supposed affinity for doughnuts, or cluck-cluck about those on-duty firemen who got caught recently helping a buddy renovate his house, very few of us would want their jobs when a 3-11alarm is sounded or when the words "shots fired" crackle over the police radio. These are special jobs that require the men and women who perform them to take extraordinary risks under extraordinary circumstances.  So maybe, just maybe, they deserve to be compensated in special ways.  And maybe, just maybe, one of these ways ought to be a defined-benefit pension with a high enough dollar amount and low enough eligibility threshold to match the risks involved. Thank you, Mr. McCarron, for having the cojones to stick up for public safety employees when everyone seems to be attacking them. And, making the point closer to home, the piece could have been written about the tragic deaths of Miami-Dade Officers Roger Castillo and Amanda Haworth. 

2.      AN ASSESSMENT OF RETIREMENT INCOME ADEQUACY FOR BABY BOOMERS AND GEN XERS:   A new Issue Brief from Employee Benefit Research Institute deals with a post-crisis assessment of retirement income adequacy for baby boomers and gen xers. The analysis was designed to answer two questions:   

• What percentage of U.S. households became “at risk” of insufficient retirement income as a result of the financial market and real estate crisis in 2008 and 2009?
• Of those who are at risk, what additional savings do they need to make each year until retirement age to make up for their losses from the crisis?

Here are the key findings: 

• Range at risk:  The percentage of households that would not have been at risk without the 2008–2009 crisis but that ended up at risk varies from a low of 3.8 percent to a high of 14.3 percent.
• 50-50 chance of adequacy:  Looking at all Early Boomer households that would need to save an additional amount (over and above the savings already factored into the baseline model), the median percentage of additional compensation for these households desiring a 50 percent probability of retirement income adequacy would be 3.0 percent of compensation each year until retirement age to account for the financial and housing market crisis in 2008 and 2009.
• 90 percent chance of adequacy:  Looking at all Early Boomer households that would need to save an additional amount, the median percentage of additional compensation for these households desiring a 90 percent probability of retirement income adequacy would be 4.3 percent of compensation.
• Range of adequacy:  Looking only at Early Boomer households that would need to save an additional amount that had account balances in defined contribution plans and IRAs as well as exposure to the real estate crisis in 2008 and 2009 shows a median percentage of 5.6 percent for a 50 percent probability and a 6.7 percent for a 90 percent probability of retirement income adequacy. 

We don’t suppose that those who are continuing to push defined contribution plans are at all concerned by these data. EBRI Issue Brief #354 (February 2011). 

3.      FEDERAL SECURITIES FRAUD CLASS ACTION ACTIVITY REMAINS LOW FOR 2010:   Federal Securities Fraud Class 
Action activity increased in the second half of 2010, but the number of filings for the full year remained low, according to Securities Class Action Filings – 2010 Year in Review, a semi-annual report prepared by the Stanford Law School Securities Class Action Clearing House in cooperation with Cornerstone Research. A total of 104Federal Securities Class Actions were filed in the second half of the year, compared with 72 filings in the first six months. For the full year of 2010, there were 176 filings, a 4.8% increase from 168 filings in 2009, but 9.7% below the annual average of 195 filings between 1997 and 2009. The number of lawsuits alleging disclosure violations in merger and acquisition transactions increased to 40 filings in 2010, from the 7 observed in 2009. These claims are typically generated by alleging violations of Section 14 of the Securities Exchange Act of 1934, which forbids solicitation of proxies in violation of rules and regulations, and making state law fiduciary claims. The 20% increase in underlying M&A activity seems insufficient to explain fully the almost sixfold increase in M&A filings, an increase that may largely be a result of changes in plaintiff law firm behavior, rather than changes in underlying market factors. Filings related to the credit crisis were sharply lower for the year, with 13 such filings in 2010, a 76.4% decrease from the 55 filings in 2009. Credit-crisis filings in 2010 represented just 7.7% of all filings, compared with 32.7% in 2009. New analysis shows that settlement rates are lower per credit-crisis filings compared with non-credit-crisis filings, while dismissal rates are similar between the two types. The difference in settlement rates appears to be driven by filings in the Second Circuit (which includes New York). 

4.      FTC SAYS RED FLAGS RULE CLARIFICATION DOES NOT END ABA CHALLENGE:   A recent law that clarifies the range of creditors who face new regulations to detect and prevent identity theft does not give a blanket exception for all lawyers, Federal Trade Commission lawyers said in court papers filed in a pending case in Washington, D.C. According to typepad.com, FTC lawyers said in papers filed in the U.S. Court of Appeals for the D.C. Circuit that legislation, which President Obama signed into law in December, does not moot the litigation in which the American Bar Association sued FTC over the so-called Red Flags Rule (see C&C Newsletter for December 16, 2010, Item 5). In August 2009, the ABA sued FTC, saying that the government was improperly seeking to regulate attorneys as financial institutions. FTC lawyers claimed that lawyers are creditors because payment often occurs after legal services have been rendered. A federal district judge ruled for ABA, granting an exception from the Red Flags Rule to all attorneys engaged in practice of law. The FTC lawyers now claim that nothing in the language of the Clarification Act suggests that lawyers -- or members of any other profession or industry -- are categorically exempt. What a waste of public money. 

5.      POLICE STRUCK BY UNUSUAL WAVE OF DEADLY VIOLENCE:   As thousands of law enforcement officers gathered inside the American Airlines Arena in Miami for a funeral for two slain Miami-Dade police officers, news quickly spread that two more officers had been shot and killed a few hours earlier -- this time in St. Petersburg, Florida.   It was an eerie repeat of the police shootings last Thursday in Miami, nytimes.com reports.  In both cases, officers were killed as they tried to serve an arrest warrant.  The Florida shootings are part of a wave of violence that law enforcement officers called highly unusual.  Thirteen officers have been shot in the United States since January 20, 2011, four fatally and several others critically wounded.  Already this year, 10 police officers have been killed in line of duty, after an especially deadly year for law enforcement (see C&C Newsletter for January 6, 2011, Item 6). The police shootings come at a time when violent-crime rates are down markedly in most American cities.  One possible explanation for the spike in shootings is that many police departments increased their emphasis on executing arrest warrants against repeat violent offenders.  Several senior police officials said they also believe the shootings reflected a broader lack of respect for authority in American society.  Bingo. 

6.      MANAGERS’ MOST EMBARRASSING MOMENTS AT WORK:   Have you ever felt like crawling under your desk on the job? According to a new OfficeTeam survey, you are in good company. Executives interviewed were asked to recount their most embarrassing moments at work. Wardrobe malfunctions were a top cause of discomfort for survey respondents. Here are a few examples: 

• I was late getting to the office and realized I wore my bathroom slippers to work.
• I conducted a training session with my zipper down (every man’s nightmare).
• My skirt got stuck in my pantyhose (every woman’s nightmare?). \My shirt was on backward (so was your head). 

Others polled found themselves red-faced in front of the very person they wanted most to impress, to-wit: 

• On the first day of my job, I tripped on the stairs and fell down in front of my boss.
• I called my boss “my love” by accident.
• I left the boss behind and went to a meeting without him.
• I said something inappropriate about my boss and found out he was standing right behind me.

OfficeTeam offers tips for rebounding from embarrassing work mishaps: 

• Remain calm.  It is easy to lose your nerves after a slipup, but try to keep your composure.  Take a deep breath and collect yourself.
• Own up.  Acknowledging a blunder before someone else does can alleviate any awkward tension that may arise.  If appropriate, address the situation in a humorous way to make everyone feel more at ease.  
• Make amends.  If your accident affected another person, immediately apologize and take steps to ensure a similar mistake does not happen again.   
• Move on.  Rather than dwell on a misstep, focus on getting back on track. The faster you recover, the less memorable the incident will be.   

Or, follow Joey Bishop’s advice in the 1967 movie “A Guide for the Married Man,” and deny, deny, deny. 

7.      REMARKABLE QUOTES FROM REMARKABLE JEWS: My idea of an agreeable person is a person who agrees with me. Benjamin Disraeli

8.      BLESSED ARE THE CRACKED, FOR THEY LET IN THE LIGHT: NyQuil, the stuffy, sneezy, why-the-heck-is-the-room-spinning medicine. 

9.      PARAPROSDOKIAN: (A paraprosdokian is a figure of speech in which the latter part of a sentence or phrase is surprising or unexpected in a way that causes the reader or listener to reframe or reinterpret the first part. It is frequently used for humorous or dramatic effect.):   Do not argue with an idiot. He will drag you down to his level and beat you with experience. 

10.    QUOTE OF THE WEEK:    “Your world is as big as you make it.” Georgia Douglas Johnson

11.    KEEP THOSE CARDS AND LETTERS COMING: Several readers regularly supply us with suggestions or tips for newsletter items? Please feel free to send us or point us to matters you think would be of interest to our readers. Subject to editorial discretion, we may print them. Rest assured that we will not publish any names as referring sources. 

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