Cypen & Cypen
SEPTEMBER 2, 2010
Stephen H. Cypen, Esq., Editor
1. SEC SUES, SETTLES WITH NEW JERSEY: On August 18, 2010 the Securities and Exchange Commission issued an order instituting cease-and-desist proceedings pursuant to section 8A of the Securities Act of 1933, making findings and imposing a cease-and-desist order against the state of New Jersey. The order finds that the state misrepresented and failed to disclose material information regarding the under funding of two of New Jersey’s two largest pension plans, Teachers’ Pension and Annuity Fund and Public Employees’ Retirement System, in the offer and sale of $26 billion in municipal bonds in 79 offerings from August 2001 through April 2007. The order finds that the state did not adequately disclose that it was under funding TPAF and PERS, why it was under funding TPAF and PERS or potential effects of the under funding. According to the order, the state’s misrepresentations and omissions created the fiscal illusion the TPAF and PERS were being adequately funded and masked the fact that New Jersey was unable to make contributions to TPAF and PERS without rasing taxes or cutting other services, or otherwise impacting the budget. The order also finds that disclosure documents failed to provide adequate information for investors to evaluate the state’s ability to fund TPAF and PERS or impact of the state’s pension obligations on the state’s financial condition. The order finds that the state had no written policies or procedures relating to review or update of the bond offering documents, and that the state did not provide training to its employees concerning the state’s disclosure obligations under accounting standards or federal securities laws. Accordingly, the order finds that the state’s procedures were inadequate for ensuring that material information concerning TPAF and PERS or the state’s financing of TPAF and PERS was disclosed and accurate in bond offering documents. Based on the foregoing, the order requires the state to cease and desist from committing or causing any violations and any future violations of Section 17(a)(2) and 17(a)(3) of the Securities Act. The state consented to the issuance of the order without admitting or denying findings in the order. As is often the case, in anticipation of institution of the proceedings, the state submitted an offer of settlement, which the commission determine to accept. Thus, the case was actually over before it started. Securities Act of 1933 Release No. 9135, Administrative Proceedings File No. 3-14009.
2. CHICAGO COP SUES FOR BLACKBERRY OVERTIME: A Chicago Police Sergeant has filed a class action against the city for relief under the federal Fair Labor Standards Act of 1938 for unpaid overtime compensation and injunctive relief. Allen alleged willful violation of FLSA by the city’s intentionally failing and refusing to pay him and other similarly-situated employees all compensation due them under FLSA over the last three years. The city allegedly administered an unlawful compensation system that failed to provided hourly compensation and premium overtime compensation to employees who worked overtime hours “off the clock.” Allen and the others were issued personal data assistants, such as BlackBerry devices, they were required to use outside the normal working hours, without receiving any compensation for such hours. The city provided Allen and the others with PDAs requiring them to be on-call 24 hours, 7 days a week, so they could access work-related emails, voice mails and text message work orders regardless of their location. Allen received numerous phone calls, emails and work orders while off the clock, and was not compensated for the time spent receiving and responding to such communications. Oftentimes, Allen received and was expected to respond to such communication throughout the night and into the early morning hours while off duty. The Chicago police department provided certain department members with PDAs so as to make Allen and the others available for answer or respond to incoming messages and phone calls within a very short time, regardless of, and without receiving, compensation for the time spent so doing. Without the PDAs and the work routinely performed while off duty, the Chicago police department would be far less successful in accomplishing its law enforcement mandate and goals. Among other relief, Allen seeks compensation for employment in excess of the hours specified by law, at a rate not less than 1 and ½ times the regular rate which he is employed. Allen v. City of Chicago, Case No. 10-CV-003183 (US ND Ill).
3. GOVERNOR WANTS TO BORROW $2 BILLION FROM CALPERS: California Governor Arnold Schwarzenegger is seeking $2 billion dollars from the $211.4 billion dollar California Public Employees’ Retirement System to credit the state. According to assetinternational.com., in order to erase a $19 billion dollar state budget deficit, the Governor has proposed a reduction of public worker pensions to 1999 levels, refusing to sign any budget that does not count the cuts. The Governor would count the $2 billion as an advance on the roughly $74 billion dollars he estimates in savings during the next three decades from his proposals to roll-back pension benefits for government workers. The advance would come from pension cuts projected to save $93 billion dollars over 30 years. Yet, California lawmakers lack a solution on whether to use high taxes or spending reductions to lower the state’s deficit. With California still lacking a statutorily-required budget, lawmakers are considering alternatives to generate savings, such as borrowing or deferring payments. Now that’s a very prudent idea: a $2 billion loan to an admittedly-insolvent borrower.
4. OHIO AG ADVISED PENSION FUNDS TO WITHHOLD RECORDS: Cleveland.com reports that the Ohio Attorney General advised the state’s pension funds not to provide records to Ohio’s newspapers (C&C Newsletter for August 19, 2010). All five of the state’s public employee pension funds denied a request from the Ohio News Organization, a collaboration of the state’s largest newspapers, to provide details about service time, pay and benefits for each of their 400,000 recipients. Identifying names would have been excluded. The newspapers argued removing the names would avoid privacy restrictions on the information, but lawyers for all five funds said restrictions remain. The newspapers, which have produced joint reports on the pension funds, sought the data to look for possible waste and abuse. Two of the funds are seeking more money from tax payers. Some of the funds said they sought advise from the Attorney General. Although each fund has its own legal staff, the Attorney General is legal advisor to each under state law.
5. JUDGE WILL NOT SCALE DOWN HOOTERS WEIGHT DISCRIMINATION SUIT: The Hooters weight lawsuit has been given the go-ahead by a judge in Michigan. The state has a law that makes it illegal to discriminate based on weight, according to business.gather.com. The 1976 law also bans discrimination on age and height. Two ex-Hooters waitresses claimed that the restaurant fired them due to their weight. However, Hooters claimed that its waitresses are entertainers and should not fall under the new law since their appearance is a concern for the business. Hooters asked the judge to dismiss the suit outright because both waitresses had signed an arbitration agreement. The judge denied the request because he did not think the women knew they were signing away their right to sue when they signed that agreement. (Right.) The case presents a difficult issue, because Hooters does have skimpy outfits and their waitresses are a big part of their image. Nevertheless, what Hooters does in Michigan maybe illegal there, and if so, Hooters may not be able to change its business model to keep operating without constant litigation. By the way, we were wondering why the Detroit Pistons had a 5'2", 300 pound, 80-year-old center!
6. JUDGE PLUGS AND KILLS HOME-INVADER: A 65-year-old Georgia judge shot and killed an intruder, abajournal.com. reports. Superior Court Judge Carlisle Overstreet was uninjured, but upset after the incident at 4 a.m. The 20-year-old dead man and another man allegedly threw a rock through a glass window at the judge’s home, entered and went upstairs. Hearing voices, the judge got his gun and found a man coming down the stairs with a bandana over his face. The judge fired, hitting the man in the chest. The man, who apparently was not armed, was on probation for a previous burglary case. We guess that, when confronted, the man should not have said “aw, shoot.”
7. JUDGE QUITS AFTER PORN FOUND ON OFFICE COMPUTER: A cleavage-crazed criminal court judge, who fathered a child with a young Legal Aid lawyer, quit after officials found a massive porn stash on his work computer, nydailynews.com reports. Disgraced Manhattan jurist James Gibbons, a whip-smart ex-prosecutor who once convicted rapists and killers, fired off a terse resignation letter after the nasty cache was uncovered. The Manhattan district attorney’s office is scouring the vile files to determine if criminal charges are warranted, and are checking whether any of the women are underage. Gibbons, 47, already had raised eyebrows with his ethics-skirting romance with a 31-year-old Legal Aid lawyer, with whom he recently fathered a son. Having been appointed to the bench by Mayor Rudy Giuliani in 2001, Gibbons was a tough law-and-order judge. When asked what his favorite television program was, ex-judge Gibbons answered “Naked City.”
8. RETIREMENT INDUSTRY ACRONYMS AND ABBREVIATIONS: Like many industries, the retirement profession is acronym and abbreviation crazy. Here is a list from 401khelpcenter.com of some of the more common acronyms and abbreviations:
We hope you will find these acronyms and abbreviations helpful, including the one we made up just to see if you were paying attention. The unabridged version is at http://www.401khelpcenter.com
9. ALL PUNS INTENDED: Two fish swim into a concrete wall. The one turns to the other and says, "Dam!"
10. OXYMORON: If you are cross-eyed and have dyslexia, can you read all right?
11. AGING JOKES: These days about half the stuff in my shopping cart says, "For fast relief."
12. FABULOUS RANDOM THOUGHTS: We wonder if cops ever get annoyed that everyone they drive behind obeys the speed limit.
13. QUOTE OF THE WEEK: “Facts do not cease to exist because they are ignored.” Aldous Huxley
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