Cypen & Cypen  
Home Attorney Profiles Clients Resource Links Newsletters navigation
777 Arthur Godfrey Road
Suite 320
Miami Beach, Florida 33140

Telephone 305.532.3200
Telecopier 305.535.0050

Click here for a
free subscription
to our newsletter


Cypen & Cypen
JULY 29, 2010

Stephen H. Cypen, Esq., Editor

1.            YOU ARE NOT GOING TO BELIEVE THE SIZE OF THESE PENSIONS!:  Three administrators whose huge salaries sparked outrage in Bell, California, a small blue-collar suburb of Los Angeles, have agreed to resign, according to The Associated Press.  Council members accepted resignations of Chief Administrative Officer, Robert Rizzo (who, at $788,000 a year, earned nearly twice the pay of the president, for overseeing one of the poorest towns in the county); Assistant City Manager, Angela Spaccia ($376,000); and police chief Randy Adams (who, at $457,000, earned 50 percent more than the Los Angeles police chief).  The three will not receive severance packages.  (What?  How cheap can you get?)  Rizzo, 56, will be entitled to a state pension of more than $650,000 a year for life, making him the highest-paid retiree in the state pension system.  Adams will receive more than $411,000 a year.  Spaccia, 51, could be eligible for as much as $250,000 a year when she reaches 55.  Unhappy residents may turn their attention to council members, four of the five of whom are paid close to $100,000 annually for part-time work.  Although the city of 40,000 residents shows a 17 percent poverty level, the mayor said he is proud of the city and the job Rizzo performed.  When Rizzo arrived 17 years ago, the city was $13 Million in debt and on the verge of bankruptcy.  Rizzo obtained government grants to aid the city, cleaned the streets, refurbished parks and leaves with a $22.7 Million budget surplus.  You decide. 

 2.            EBRI RETIREMENT READINESS RATING:  With Americans living longer in retirement, the 2010 Employee Benefit Research Institute Retirement Readiness Rating just released shows dramatically high percentages of Americans, even in the upper-income categories, are likely to run short of money after 10 or 20 years of retirement.  The new analysis finds that almost two-thirds (64 percent) of Americans in the two lowest preretirement income levels will be running short after 10 years in retirement.  However, the EBRI study also finds that after 20 years of retirement, almost a third (29 percent) of those in the next-to-highest income level will run short of money, as will 1 in 10 (13 percent) of those in the highest-income level.  Not surprisingly, those with the highest income are at the lowest risk of running short of money, but many in the highest income category will face significant risks of not being able to pay basic expenses and uninsured medical expenses for the remainder of their lives.  The Retirement Readiness Rating is based on a model that evaluates national retirement income adequacy.  The newest version of the model factors in many new retirement plan changes, such as auto-enrollment and auto-escalation of contributions to 401(k) plans, as well as updates for financial market performance and employee behavior (based on a database of 24 million 401(k) participants).  S-C-A-R-Y. 

 3.            PLACEMENT AGENT SAYS HE WILL SUE CalPERS:  Alfred Villalobos, former CalPERS board member accused of bribery, said he plans to sue the pension fund for spreading lies about him.  According to, Villalobos will sue the California Public Employees' Retirement System for $10 Million.  The California Attorney General sued Villalobos for $95 Million, alleging he bribed the then-CalPERS Chief Executive and two other fund officials to steer billions in investments to his Wall Street clients.  The state obtained a court order freezing most of Villalobos's multimillion-dollar fortune.  Villalobos filed for bankruptcy protection, blaming the AG’s lawsuit and freeze on his assets.  Villalobos was little known to the public until last October, when CalPERS disclosed he had earned around $50 Million in commissions helping his clients win investments from the big pension fund.  Apparently Villalobos has a couple of titanium body parts. 
 4.            DB PLANS FACE VALUATION AND OTHER CHALLENGES WHEN INVESTING IN HEDGE FUNDS AND PRIVATE EQUITY:  Barbara Bovbjerg, Managing Director, Education, Workforce, and Income Security, United States Government Accountability Office, recently testified before the Subcommittee on Health, Employment, Labor and Pensions, Committee on Education and Labor, House of Representatives.  Ms. Bovbjerg said a growing number of private and public2 sector plans have invested in hedge funds and private equity, but such investments generally make up a small share of total plan assets.  According to a survey of large plans, the share of plans with investments in hedge funds grew from 11 percent in 2001 to 51 percent in 2009.  Over the same time period, investments in private equity were more prevalent but grew more steadily -- an increase from 71 percent in 2001 to 90 percent in 2009.  Still, the average allocation of plan assets to hedge funds was less than 5 percent, and the average allocation to private equity was less than 8 percent.  Available data also show that investments in hedge funds and private equity are more common among large pension plans, measured by assets under management, compared to mid-size plans.  Survey information on smaller plans is unavailable, so the extent to which these plans invest in hedge funds or private equity is unknown.  Hedge funds and private equity investments pose a number of risks and challenges beyond those posed by traditional investments.  For example, investors in hedge funds and private equity face uncertainty about precise valuation of their investment.  Hedge funds may, for example, own thinly traded assets whose valuation can be complex and subjective, making valuation difficult.  Further, hedge funds and private equity funds may use considerable leverage -- use of borrowed money or other techniques -- which can magnify profits, but also magnify losses if the market goes against the fund's expectations.  Also, both are illiquid investments -- that is, they cannot generally be redeemed on demand.  Finally, investing in hedge funds can pose operational risk:  risk of investment loss from inadequate or failed internal processes, people and systems, or problems with external service providers rather than an unsuccessful investment strategy.  Plan sponsors address these challenges in a number of ways, such as through careful and deliberate fund selection, and negotiating key contract terms.  For example, investors in both hedge funds and private equity funds may be able to negotiate fee structure and valuation procedures, and the degree of leverage employed.  In addition, plans address various concerns through due diligence and monitoring, such as careful review of investment, valuation and risk management processes.  The Department of Labor has a role in helping to ensure that plans fulfill their Employee Retirement and Income Security Act of 1974 fiduciary duties, which includes educating employers and service providers about their fiduciary responsibilities under ERISA.  Some pension plans, such as smaller plans, may have particular difficulties in addressing various demands of hedge fund and private equity investing. Thus, in 2008, GAO recommended that Labor provide guidance on challenges of investing in hedge funds and private equity and the steps plans should take to address these challenges.  Labor generally agreed with GAO’s recommendation, but has yet to take action.  GAO-10-915T (July 20, 2010). 

 5.            TELEVISION “TESTIMONY” CANNOT BE USED FOR LATER IMPEACHMENT:  Its dramatic merits notwithstanding, TV judge Marilyn Milian's "The People's Court" is not in fact a court of law, and a woman's statements while appearing as a "plaintiff” on the show may not be later used against her in an actual legal proceeding, a New York state judge has ruled.  As reported by Daily Business Review, a judicial officer had relied on a woman's "sworn testimony" from an appearance on "The People's Court" to determine that the woman had not lived with her recently deceased mother, and therefore did not have succession rights to her apartment.  But in a recent order, a Brooklyn Supreme Court Justice has thrown out the hearing officer's findings, holding the "The People's Court" testimony was not legal testimony.  The real judge wrote that the words or statements uttered by show participants are not testimony, and are neither sworn nor reliable.  For her part, TV judge Milian was bewildered:  Although the judge is correct that “The People's Court” is not a body authorized by law to administer an oath, it is incorrect that a statement to be admissible, needs to be under oath.  Meanwhile, New York City (the other party in the real case) is considering its appellate options. We would put our money on the TV judge in this one. 

 6.            $250,000 FDIC INSURANCE PERMANENT:  On July 21, 2010, President Barack Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act, which, in part, permanently raises the current standard maximum deposit insurance amount to $250,000.  The standard maximum insurance amount of $100,000 had been temporarily raised to $250,000 until December 31, 2013.  The FDIC insurance coverage limit applies per depositor, per insured depository institution for each account ownership category.  The temporary increase from $100,000 to $250,000 was effective from October 3, 2008, through December 31, 2010.  On May 20, 2009, the temporary increase was extended through December 31, 2013.  With this permanent increase of deposit insurance coverage to $250,000, depositors with certificates of deposit above $100,000 but below $250,000 will no longer have to worry about losing coverage on those CDs maturing beyond 2013.  More information is available at

 7.            JUDICIAL COMMENTARY ON PENSIONS:  In concurring in the  Supreme Court of Michigan’s decision to deny O’Brien’s application for leave to appeal, a judge wrote to express her shock and disbelief at his salary as a school superintendent, to urge legislative attention to the statutory scheme that gave rise to the expenditure and to alert the public to this use of its tax dollars.  O’Brien was a school district superintendent from 1998 until his retirement in 2006.  During that time, he made regular contributions to the public employees retirement fund.  The subject case concerned O’Brien’s dispute with the retirement board over the amount of his remuneration that may be considered  "compensation" under the retirement act for purposes of determining his monthly pension benefit.  An employee's retirement benefit is calculated based on his "final average compensation," which is an average of the employee's reportable compensation for the 36 consecutive months during which the employee had the highest compensation.  O’Brien contested the final average compensation calculated by the retirement office, and appealed to the school board, which denied the request that his retirement allowance be increased from $8,350 per month to $15,600 per month.  The judge wrote to express her amazement at the amount O’Brien was compensated for serving as a public employee, and to draw legislative and public attention to the alarming facts.  For the year ending June 30, 2001, O’Brien earned a total of $159,000.  For the year ending June 30, 2006, O’Brien earned a total of $419,000.  That year’s compensation included: 

$154,000 gross salary

$ 24,500 deferred compensation

$ 17,400 for days worked beyond allotted vacation and personal days

$ 20,100 for reimbursement to O’Brien’s Investment Plan

$ 30,800 for merit pay

$ 57,800 for longevity

$114,100 for purchase of two years service credit by the district or “the equal cost of an investment” by O’Brien

Concerning the last item, the retirement act provides for a member to purchase service credit.  The member's annual retirement benefit amount increases with an increase in the amount of service time, and a member may expand his service time by purchasing service credit (that is, “air time”).  Here, O’Brien's employment contracts stated the district would purchase retirement credit in the system for his benefit or, at his election, pay the cost of such years into an investment of his choice.  In other words, the oinker received over $100,000 to increase his service time by two years and then wanted additional credit therefor to increase his final average compensation!  O'Brien v Public School Employees' Retirement Board, Case No. SC:140484 (Mich., June 4, 2010). 

 8.            LAWYER ALLEGEDLY PUNCHES LAWYER WHO CALLED HIM STUPID AND BALD:  A 46-year-old Philadelphia area lawyer was briefly jailed and manacled last week after allegedly punching an opposing counsel who reportedly called him stupid, bald and an unprintable word. reports that the incident, which was captured on a surveillance camera, showed 46-year-old Michael Rauch throwing three roundhouse punches at John Fisher.  Rauch was briefly jailed afterward, and taken in handcuffs and leg chains to be arraigned before he was released on $10,000 unsecured bond.  He was charged with simple assault, harassment and disorderly conduct.  Fisher declined to comment, other than to say he would never again buy Rogaine for Rauch. 

 9.            PAY CZAR CHOSE NOT TO GO AFTER $1.6 BILLION IN BANK PAY:  The Obama administration's pay czar said he did not try to recoup $1.6 Billion in lavish compensation to top executives at bailed-out banks because he thought shaming the banks was punishment enough.  (Naughty, naughty.  Go to your room now.) Kenneth Feinberg said 17 banks receiving taxpayer money from the $700 Billion financial bailout made "ill-advised" payments to their executives.  But he stopped short of calling them "contrary to the public interest" -- language that would have signaled a fight to get the money back.  Feinberg could not force the banks to repay the money, but the law required him to negotiate with banks to return the money if he determined that allowing them to keep it was not in the public interest.  He said such a fight could have exposed banks to lawsuits from shareholders trying to recapture the executives' money (...and...?).  Feinberg said his public shaming of the 17 banks was sufficient.  By avoiding use of the strongest language in his report, Feinberg could criticize the banks without endangering the weak economic recovery.  Among the companies he let go are two whose bailouts will cost taxpayers billions:  American International Group Inc. and CIT Group Inc.  Rather than demanding they return the money, says Feinberg invited the 17 banks to give their boards of directors more power to withhold pay during future crises.  The request was voluntary.  Feinberg determined that a total of $1.7 Billion in payments were made between  October 2008 and February 2009 that would have violated later-adopted guidelines.  And $1.6 Billion of that amount was paid out by 17 of the country's largest financial institutions.  Greed is good. 

10.            DEPRESSED PEOPLE MAKE BETTER LAWYERS:  There seems to be a whole slew of books and articles on lawyers and happiness.  The Careerist’s chief blogger cannot quite understand the phenomenon, and does not know any practicing lawyer who has actually read one.  As a population, lawyers suffer from depression, anxiety, alcoholism and suicide more than any other profession.  (Gulp.)  Most of the evidence on lawyer unhappiness predates the economic crisis:  20 to 25 years ago.  Studies show that optimistic people outperform all others in every measure of job success except lawyers.  There is some validity to the study, because lawyers look for the worst-case outcome and plan around it.  Pessimism is useful in many types of law practice.  Being miserable does not necessarily make you a better lawyer:  there are lawyers who are happy and successful.  Catastrophic thinking is part of being a lawyer.  If a client does not call a lawyer back, he should not assume they hated the opinion letter he just drafted.  Sure. 

11.            COST OF CALIFORNIA’S MINIMUM-WAGE FIGHT RUNS INTO REAL MONEY:  The battle pits Gov. Arnold Schwarzenegger (who says Controller John Chiang has to withhold state workers' pay to the federal minimum allowed during a budget impasse) against Chiang (who says he will not do it because the state's ancient payroll systems and procedures cannot handle the task without triggering a slew of labor law violations) (see C&C Newsletter for July 8, 2010, Item 6).  The controller has spent over $1 Million on minimum-wage litigation since the summer of 2008, according to the Sacramento Bee.  He also paid a consultant $240,000 for a report that says it would take up to four years and more than $11 Million to get the current payroll system up to minimum-wage speed.  And how much have minimum-wage battles cost Schwarzenegger's side?  It is hard to say, since the governor has been using in-house counsel, and hours logged by them have not been made available.  (Not that Schwarzenegger is above using outside contract attorneys:  he spent  over $1 Million on furlough lawsuit lawyers.)

12.            SECURITIES LITIGATION SURGES FOLLOWING QUIET FIRST QUARTER:  A surge in securities litigation in the second quarter of 2010 was driven by short-term reactions to headline-grabbing events, as well as what are shaping up to be longer term shifts in litigation trends.  As reported by, the number of securities lawsuits filed in the quarter, including derivative actions, regulatory suits and other suits with securities-related allegations in addition to securities class action suits, was up sharply -- nearly 30 percent higher than the first quarter, and about 19 percent above the very active second quarter of 2009.  The heightened activity was due in large measure to suits sparked by highly visible events such as the government investigation of Goldman Sachs, and the Deepwater Horizon oil spill.  The focus on Goldman Sachs was, in part, responsible for a small surge in the subprime/credit crisis suits, although other factors suggest that these events will not be driving a material number of new suits in the future. While subprime/credit crisis suits are on the wane, financial firms continued to be targeted frequently.  The average settlement through the first half of 2010 -- for all categories of securities suits, and including proposed and tentative settlements -- fell as compared to 2009, from $29.6 Million to $18.9 Million. Though the overall average fell, the average securities class action settlement increased materially from $10.4 Million to $49.6 Million.  The U.S. Supreme Court handed down several decisions at the end of the second quarter that will influence pending and future securities litigation to varying degrees.  In a challenge to the Sarbanes-Oxley Act, the Court upheld all substantive provisions of the law (see C&C Special Supplement for July 2, 2010, Item 2).  In a case involving Jeffrey Skilling, the Court ruled that the former Enron CEO should not have been convicted of violating federal "honest services" fraud law (see C&C Special Supplement for July 2, 2010, Item 3).  But perhaps the most significant decision as concerns securities litigation effectively put an end to so-called f-cubed cases -- lawsuits brought in the United States by foreign shareholders of foreign companies with shares traded on foreign exchanges.  In Morrison v. National Australia Bank, the Court held that plaintiffs cannot pursue fraud claims in U.S. courts for securities purchased on foreign exchanges (see C&C Special Supplement for July 2, 2010, Item 5).
13.            COURT-IMPOSED TWO-HOUR RULE BETWEEN ARREST AND RELEASE OVERTURNED:  The City of Chicago occasionally makes custodial arrests of persons who have committed offenses that are punishable by fines but not imprisonment.  The Constitution allows police to make custodial arrests for fine-only offenses, which is more likely to occur if the suspect cannot or will not provide identification that would allow police to write a ticket.  Still, even an uncooperative person is entitled to be released after a reasonable time during which the arresting authority learns who he is, performs a check for outstanding warrants and obtains consent to the terms of bond.  After Chicago's police know the arrested person's identity, and conclude that he is not wanted on a more serious charge, and a supervisor determines that probable cause supports the accusation, a Central Booking number is issued, which establishes the person's entitlement to be released on a personal-recognizance bond.  Plaintiffs in a class action contended that taking more than two hours to perform the steps needed to get from generation of the CB number and the suspect's release necessarily makes detention unreasonable, and violates the Fourth Amendment.  After the district court agreed, the Seventh Circuit Court of Appeals accepted an immediate appeal.  Unlike the Supreme Court-established 48-hour line between arrest and presentation to a magistrate for a probable-cause hearing, the district court's two-hour rule is not a burden-allocation device; the district judge concluded that it just does not matter why the process from CB number to release takes more time.  However, it is very hard to justify an inflexible two-hour rule.  More than hard.  It is impossible.  The district court did not explain why it set a time limit for a particular part of the process.  What is reasonable, or not, is how much time passes between arrest and release, in relation to the reasons for detention; the time for each step along the way is not subject to an independent limit.  Plaintiffs bear the burdens of proof and persuasion on the contention that any particular detention was excessive, and the court must examine not only the length of a given detention but also the reasons why release was deferred.  A series of decisions finding one or another delay unreasonable (or justified) may lead Chicago to modify its policies, but no numerical shortcut will cover all situations.  Thus, not only did the district court err in prescribing a two-hour limit from CB number through release, the class must also be decertified.  Because reasonableness is a standard rather than a rule, and because one detainee's circumstances differ from another's, common questions do not predominate, and class certification is inappropriate. The three individual plaintiffs may be able to show that they were held unreasonably long, but they must do so without benefit of a two-hour cap, and their claims must proceed as personal rather than class litigation. The appellate court did not foreclose possibility of  class-wide relief, but the record so far did not establish deliberate delay.  Portis v. City of Chicago, Illinois, Case No. 09-1498 (US 7th Cir., July 23, 2010). 

14.            CITY OF MIAMI IN “HOSTAGE” SITUATION; S.W.A.T. CAN’T HELP:  Tens of thousands of boxes filled with sensitive and not-so-sensitive city of Miami documents, from personnel files to scribbled notes taken during garbage truck oil changes, are being held “hostage”' at a storage facility in Broward County, according to the Miami Herald.  The owner of the facility says the financially strapped city owes $340,000, and cannot have its records until it pays.  The unusual dispute has meant that Miami city attorneys have had to make public records requests for the city's own public records!  The parties are a long way off from resolving the dispute:  Miami contends it only owes $22,000.  The more things change, the more they stay the same. 

15.            HOW THE SOCIAL SECURITY SQUEEZE CAN BE SOLVED:  The footsteps of an aging America are hard to ignore, especially with daily alarms ringing over the federal government's debt and deficit. says the leading edge of the baby boom generation is reaching its retirement years and at the core of the long-term fiscal challenge lie the three main entitlement programs, Social Security, Medicare and Medicaid.  Spending on entitlements is growing faster than the economy and revenues.  There is a fiscal carve-out maneuver that would greatly ease the deficit-and-debt reduction task.  Most commentary assumes that socialsecuritymedicaremedicaid is one word.  Yes, they are all entitlement programs, yet the bulk of the long-term budget pressure comes from higher health-care spending.  For instance, the benchmark 75-year projection of the Social Security Trustees guesstimates the cost of Medicare alone to swell to 11.4 percent of gross domestic product in 2083 -- 94 percent larger than Social Security's cost.  In fact, there is no Social Security crisis.  The system is not broke.  There is financial trouble down the road, but it is manageable.  Yet, the title of the House Ways & Means subcommittee on Social Security hearing on July 15, 2010  got to the essence of the matter:  Social Security at 75 Years -- More Necessary Now Than Ever.  So, separate Social Security from the rest of the entitlement fight, and deal with it on its own merits.  For one thing, it is important to remember that economic growth alone cannot solve the long-term budget deficit and debt overhang, but a healthy economy will address at least some, if not all, of the projected Social Security shortfall.  For instance, a critical assumption in the long-term projection of Social Security shortfall is based on average annual productivity growth of 1.7 percent after 2018.  The far more optimistic long-term scenario has productivity growth averaging 2.0 percent after 2019 and, with increased productivity boosting wages, the shortfall is put off well into the future.  (The low-cost scenario assumes a number of other economic factors such as higher immigration than the baseline intermediate scenario forecast, but productivity growth is critical to the outlook.)  To be sure, rising wages pump up benefits as well as revenues over time.  And while economists know that boosting productivity involves a mix of improving education and worker skill, investing in knowledge and innovation, encouraging entrepreneurship and a sound infrastructure, there is a great deal of uncertainty surrounding impact of the policy mix, let alone the timing.  Thus, prudence dictates shoring up fiscal soundness of the system through a modest mix of changes, such as raising the retirement age and doubling the cap on annual wages subject to the payroll tax.  (The Congressional Budget Office offers a list of options in its July 2010 report, at  But, instead of just keeping the system afloat, why not take the opportunity to make it better?  The U.S. population is aging and it's well-known that Americans have not been saving enough for their old age.  One way to bolster retirement savings is to add to the Social Security system a program of voluntary additional contributions.  The money could be invested in a limited menu of low-cost, broad-based options reminiscent of the federal government's Thrift Savings Plan.  (Even more intriguing is the idea of a mandatory savings program, but that kind of bold idea is not on the table.  Nevertheless, it does show the range of solutions in the marketplace that will make the woes of Social Security far easier to address than those of its entitlement cousins.) 

16.            MONEY MANAGEMENT REPORT SUGGESTS 3-IN-1 APPROACH: says that risk management methods now in vogue among corporate defined benefit plan executives do not deliver what they promise.  Long-duration fixed-income allocation, synthetic duration extension and dynamic asset allocation -- three of the most popular risk-management approaches used by many corporate plans -- simply do not provide enough protection in controlling downside pension contribution and expense risks when used separately, according to a new report from J.P. Morgan Asset Management.  However, a “3-in-1” approach to managing tail risk in pension liability streams that combines strategies in a multidimensional risk management framework will be effective in managing corporate pension fund liability risk, according to the analysis.  The latest white paper stems from interest expressed by a large number of corporate defined benefit plan executives in the concept of non-normality, which was analyzed in a 2009 paper.  The three key issues that corporate defined benefit plan sponsors say they are most interested in are downside contribution risk, median contribution risk and pension expense.  Extreme negative events and downside risk do not just apply to asset returns. When a crisis hits, liabilities can suffer consequences just as hard and be just as dangerous for the investor.  The two most recent extremely negative events -- from 2000 to 2002 and 2008 -- devastated funding levels of many corporate pension plans, resulting in need for unexpectedly higher contributions to bring plans back to full funding.  By the end of 2008, the average funding ratio for U.S. corporate defined benefit plans was75%. It rose to 82% at the end of 2009, but fell back 12% as of June 30, 2010.  Morgan proposes an optimal 3-in-1 strategy, combining a long-duration fixed-income allocation; a dynamic 50% swap overlay that provides a constant dollar duration over time; and dynamic asset allocation that increases and decreases the pension fund portfolio's fixed-income allocation as the funding ratio improves or deteriorates.  So far, none of Morgan's corporate defined benefit plan clients has adopted the 3-in-1 approach (probably because they do not understand it, either). 

17.            PUBLIC PLANS CUT MONEY MANAGEMENT FEES:  U.S. public pension fund officials are increasingly asking external investment managers for fee concessions as part of an effort to cut operating costs.  The most visible fee reduction efforts are those of the nation's two largest public pension systems, the $204 Billion California Public Employees' Retirement System and the $130 Billion California State Teacher's Retirement System.  CalPERS officials said they have saved $99 Million in fees in the past six months across asset classes as the result of fee reductions.  CalSTRS officials said they have been reaching a high level of success, as they push for an average 15% across-the-board cut for all external investment managers.  (CalSTRS’ $140 Million annual expense on money management fees is its biggest administrative expense.)   A consultant to money managers said they have been a lot more willing to cut fees for existing clients because new mandates have been hard to come by in the past several years.  When demand is down, there is more of a proclivity for investment managers to be a bit soft on fees.  However, the consultant believes the window for fee speculation will be shrinking in coming months as more pension funds launch more manager searches.  For sure, the largest pension plans still will be able to have the most leverage at getting discounted fees because their mandates are larger.

18.            SALARY BUDGETS SHOW MODEST INCREASES:  On average, employers increased their 2010 salary budgets by 2.5%, which means many workers can expect to see pay raises fall within that range, according to the WorldatWork 2010-2011 Salary Budget Survey, reported by  Employers realize that to retain top-performing workers, pay raises will have to surpass the 2.5% rate.  As a result, highly-valued employees can expect to see salary increases of 3.7%.  Interestingly, employers believed about 24% of workers are high performers.  By contrast, low performers will have to be satisfied with a minimal increase of about 0.7%, while middle (average) performers might take home a nominal base pay raise of 2.4%.  For total salary budget increases by state and by major metropolitan area, Florida and Miami were the same:  an actual 2.5% for 2010 mean and median, and a projected 2.9% and 3.0%, respectively, for 2011. 

19.            INSTITUTIONAL STOCK HOLDINGS AT BULL MARKET HIGH:  Pension funds, endowments and mutual funds are spending more on stocks than at any time since start of the bull market, according to a Citigroup survey summarized by  Institutions pushed equities up to 68% of their holdings in July, the highest level in 15 months, from 63% in April.  In contrast, the ratio of bullish to bearish respondents in a survey has fallen to 0.68 the lowest level since July 2009.  The last time money managers and individuals were this far apart was in March 2009, before the S&P 500 began its 63% rally.  The dichotomy may signal another buying opportunity after concern the U.S. economy will fall into a recession wiped out $1.6 Trillion from American equity values since April.  Pension funds, endowments, hedge funds and mutual funds say they are preparing for a rally.  Fifty-four percent (up from 50%) said U.S. equities may gain 10% to 20%.  (We guess that means 46% said U.S. equities may not gain 10% to 20%.)  It’s a dart board out there. 

20.            AFTER 50-YEAR LOW LAW ENFORCEMENT FATALITIES SURGE 43% IN FIRST HALF OF 2010:  After reaching their lowest level in 50 years in 2009, law enforcement fatalities surged nearly 43% during the first six months of 2010.  If the trend continues, 2010 could end up being one of the deadliest years for U.S. law enforcement in two decades.  Preliminary data from the National Law Enforcement Officers Memorial Fund show that 87 officers died in the line of duty between January 1 and June 30, 2010.  By comparison, 61 officers were killed during the first six months of 2009.  Officer fatalities rose 42.6 percent between the first half of 2009 and the first six months of 2010.  By June 30, 2010, officer fatalities had already reached 75 percent of the year-end total for 2009, which was 116, the lowest number of line-of-duty deaths since 1959.  All major categories of officer deaths rose sharply during the first half of 2010, according to NLEOMF's preliminary data: 

  • Firearm-related deaths increased 41 percent, from 22 in 2009 to 31 in 2010. The increase continues the trend from 2009, when gunfire deaths rose 22 percent. 
  • Traffic-related fatalities were up 35 percent, from 31 to 42. Twenty-nine officers died in automobile crashes, 4 in motorcycle crashes and 9 were struck and killed while outside their vehicles -- all increases from 2009. 
  • Deaths from all other causes combined jumped 75 percent, from 8 to 14, including 8 officers who died this year from physical-related injuries or illnesses.

Thirty states and Puerto Rico experienced at least one officer fatality during the first six months of 2010.  In addition, five federal law enforcement officers died in the line of duty this year.  (At six total fatalities, Florida trails only Texas with eight and California with nine.) Over the last decade, approximately 48 percent of all fatalities occurred during the first six months of the year.  If that percentage holds true this year, the year-end fatality figure could approach the 2007 total of 185.  Other than 2001 (when 240 officers died, including 72 killed in the terrorist attacks of September 11), 2007 was the deadliest year for U.S. law enforcement since 1989 (195 deaths).  Our thoughts are with the families and friends of these fallen heroes. 

21. ALL PUNS INTENDED:  Mahatma Gandhi, as you know, walked barefoot most of the time, which produced an impressive set of calluses on his feet. He also ate very little, which made him rather frail and with his odd diet, he suffered from bad breath. This made him a super-calloused fragile mystic hexed by halitosis. 

22. OXYMORON:   Why doesn't glue stick to the inside of the bottle? 

23. AGING JOKES:  The nice thing about being senile is you can hide your own Easter eggs.

24. FABULOUS RANDOM THOUGHTS:  Even under ideal conditions people have trouble locating their car keys in a pocket, finding their cell phone, and Pinning the Tail on the Donkey - but I’d bet everyone can find and push the Snooze button from 3 feet away, in about 1.7 seconds, eyes closed, first time every time...  

25. QUOTE OF THE WEEK:   “The opposite of talking isn’t listening.  The opposite of talking is waiting.”  Fran Lebowitz

26. PLEASE SHARE OUR NEWSLETTER:  Our newsletter readership is not limited to the number of people who choose to enter a free subscription.  Many pension board administrators provide hard copies in their meeting agenda.  Other administrators forward the newsletter electronically to trustees.  In any event, please tell those you feel may be interested that they can subscribe to their own free copy of the newsletter at  Thank you. 

Copyright, 1996-2011, 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.

Site Directory:
Home // Attorney Profiles // Clients // Resource Links // Newsletters