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Cypen & Cypen
November 22, 2018

Stephen H. Cypen, Esq., Editor

Yes, the rich are getting richer — at least cumulatively speaking. According to the released Forbes 400 list of richest Americans, the combined net worth of this year’s 400 is $2.7 trillion, up from last year’s $2.4 trillion. Making the list now requires a minimum of $2 billion in holdings, up from $1.7 billion last year. Once again, the top five slots are held by perennial billionaires Bill Gates of Microsoft fame ($89 billion, up $8 billion from 2016), Amazon’s Jeff Bezos ($81.5 billion, up $14.5 billion), Berkshire Hathaway’s Warren Buffett ($78 billion, up $12.5 billion), Facebook’s Mark Zuckerberg ($71 billion, up $15.5 billion) and Oracle’s Larry Ellison ($59 billion, up $9.7 billion). South Florida’s wealthiest include No. 43 Miami Beach-based hedge fund investor David Tepper ($11 billion); No. 50 Carnival Corp. Chairman and Miami Heat owner Micky Arison ($9.4 billion) of Bal Harbour; No. 97 frozen foods magnate Robert Rich of Islamorada ($5.5 billion); No. 150 National Beverage founder Nick Caporella of Plantation ($4.5 billion); No. 240 entrepreneur and philanthropist Phillip Frost ($3.2 billion), No. 264 Miami-based airline magnate Rakesh Gangwal ($3 billion); No. 264 real estate developer Jorge Pérez ($3 billion); No. 288 entrepreneur H. Wayne Huizenga ($2.8 billion); No. 324 auto magnate Norman Braman ($2.5 billion). The lengthy Palm Beach County list includes Marvel Comics owner No. 179 Isaac Perlmutter ($3.9 billion); No. 186 real estate investor Jeff Greene and No. 324 John Henry ($2.5 billion), owner of the Boston Red Sox. Plenty of those on the list with strong local ties include No. 21 Elon Musk ($20.8 billion) of Tesla and SpaceX, No. 23 Russian-born oil magnate Len Blavatnik ($19.5 billion, partner in Faena on Miami Beach, No. 27 investor and Indian Creek homeowner Carl Icahn ($16.7 billion), No. 65 Miami Dolphins owner and developer Stephen Ross ($7.5 billion); No. 85 Richard LeFrak ($6.1 billion) co-developer of the 1 Hotel on Miami Beach and SoLeMia in North Miami and No. 248 U.S. President Donald Trump ($3.1 billion). Maybe they should check out the Florida income tax laws. Jane Wooldridge, Miami Herald, October 17, 2018.
When major wildfires recently broke out in northern and southern California, Ron Jarmin, performing the nonexclusive functions and duties of the director of the Census Bureau, activated the agency’s Emergency Preparedness and Response Team (EPRT). Demographic, economic and business data are crucial in times like these. That’s why the Census Bureau collects data year-round for emergency management professionals at the federal, state and local levels. The information was critical for planning and recovery during this year's hurricane season. Hurricane Michael that hit the Gulf Coast was the seventh Atlantic hurricane this year. The EPRT has prepared hundreds of reports this season on counties that may be affected. The EPRT is a team of economists, demographers, statisticians and outreach professionals. Its mission: To coordinate, prepare and disseminate the data to emergency teams, the public and the media. In August 2017, Hurricane Harvey became the first major hurricane to impact the United States since Hurricane Katrina in 2005. Technology has come a long way since then. What used to take many staff hours to produce now can be done in minutes with newly developed easy-to-use tools to disseminate data that were not available then. The EPRT relies heavily on two tools: OnTheMap for Emergency Management and Census Business Builder: Regional Analyst Edition to provide data on more than 170 demographic and economic variables. Demographic data such as population, percentage in poverty, percentage disabled, average income, and percentage speaking Spanish at home are readily available. Economic data on businesses, such as number of employer and nonemployer businesses, total revenue, and key statistics on the biggest industries in a county are quickly assimilated at various geographic levels. These data help officials determine their economic portfolio and potential needs during and after the disaster event. The Census Bureau’s emergency response team works very closely not only with sister agencies at the U.S. Department of Commerce (National Oceanic and Atmospheric Administration and Economic Development Administration), but with several other federal agencies: FEMAHealth & Human Services and the CDC. The Census Bureau is part of a number of different emergency management working groups organized by FEMA to coordinate the federal government’s disaster response and recovery efforts such as: economic recovery, health and social services recovery, community planning and capacity building recovery and data analysis. It is also part of a group of Department of Commerce agencies focused on economic recovery in Puerto Rico. In 2017, after four hurricanes (Harvey, Irma, Nate and Maria) and wildfires in California, the EPRT produced reports and maps covering more than 600 geographies. These are always shared with other agencies and posted for public use. The importance of timely and accurate responses to demographic and economic surveys can’t be overstated. Without good survey response, the Census Bureau would be unable to provide valuable, timely data for use during emergencies. “It’s a top priority for the Census Bureau to get useful demographic and economic data to emergency managers as quickly as possible so that they can make informed decisions,” Jarmin said. The Census Bureau is prepared to respond to this hurricane season or during any other emergency that may arise. You and your family should be too. Chip Walker, co-chair of the Census Bureau's Emergency Preparedness and Response Team, November 13, 2018.
We’ve all known for a long time that scammers ask people to pay by wiring money. Money wiring companies like MoneyGram and Western Union have also known that scammers have people wire money using their services. In fact, the Federak Trade Commission (FTC) has sued both companies – which have paid a lot of money to settle those charges – over exactly that issue. When the FTC settled with those companies (MoneyGram in 2009, Western Union in 2017), they also agreed to make changes to protect people from fraud. Except MoneyGram didn’t actually take some of those important steps. That’s why the FTC and the Department of Justice (DOJ) just announced a new settlement with MoneyGram for $125 million. That money will eventually go back to people who wired – and lost – money to a scammer through MoneyGram starting in 2013. (There will be a date range for eligible refund requests. Exact dates will follow.) Here’s the story: in 2009, MoneyGram had promised to vet the agents they were hiring, train them to spot fraud, monitor them to watch for fraud-related money transfers, take action if they saw an agent who didn’t try to reduce fraud, and also record fraud complaints and share them with the FTC. But the FTC’s investigation showed that MoneyGram hadn’t adequately done those things – especially in their large chain outlets. And MoneyGram’s system that should have helped spot and stop fraudsters operating in plain sight? It basically didn’t work for a year and a half, letting millions of dollars in fraud-related transfers go through. Now, MoneyGram has to put in place more protections that address all the ways it did not follow the order last time. And pay that $125 million to DOJ, which will work with the FTC to set up a refund program to get it back to people. What should you do to get a refund? Right now, nothing. It might take several months for the refund process to even start. When it does, it will be free to request a refund. Karen Dodge, Federal Trade Commission Staff Attorney, November 8, 2018.

A Pasco County golf cart retailer paid $62,413 in back pay and damages after getting caught trying to take a few strokes off their workers’ overtime pay, the Department of Labor has announced. Instead of paying workers overtime when they earned it, Affordable Golf Carts would pay them regular per hour pay in cash, according to the Labor Department. Paying in cash also diminishes the paper trail, which was already wispy after Affordable didn’t record the overtime its employees worked. “Paying employees in cash off the books does not relieve employers of their responsibility to pay employees the wages they have legally earned,” Wage and Hour Division District Director James Schmidt said in a statement on Tuesday. Owner Denise Van Den Heuvel registered Affordable Golf Carts as a corporation with the state of Florida in 2005. Miami Herald, November 8, 2018.
5. VETERANS DAY 2018, NOV. 11:
Veterans Day originated as “Armistice Day” on Nov. 11, 1919, the first anniversary marking the end of World War I. Congress passed a resolution in 1926 for an annual observance, and Nov. 11 became a national holiday beginning in 1938. President Dwight D. Eisenhower signed legislation in 1954 to change the name to Veterans Day as a way to honor those who served in all American wars. The day honors military veterans with parades and speeches across the nation and a remembrance ceremony takes place at the Tomb of the Unknowns at Arlington National Cemetery in Arlington, Va. The ceremony honors and thanks all who served in the U.S. armed forces. The following facts are made possible by the invaluable responses to the U.S. Census Bureau’s surveys. We appreciate the public’s cooperation as we continuously measure America’s people, places and economy.
Did You Know?
 18.2 million
The number of military veterans in the United States in 2017.
1.6 million
The number of female veterans in the United States in 2017.
The percentage of veterans in 2017 who were black. Additionally, 77.3 percent were non-Hispanic white, 1.6 percent were Asian, 0.8 percent were American Indian or Alaska Native, 0.2 percent were Native Hawaiian or Other Pacific Islander, and 1.4 percent were some other race. (The numbers for blacks, non-Hispanic whites, Asians, American Indians and Alaska Natives, Native Hawaiians and Other Pacific Islanders, and some other race cover only those reporting a single race.) 

The percentage of veterans in 2017 who were Hispanic.
The percentage of veterans age 65 and older in 2017. At the other end of the age spectrum, 8.9 percent were younger than age 35.

United States Census Bureau, CB18-FF.08 (November 5, 2018).
As many as 121 multiemployer pension plans covering 1.3 million workers are underfunded by $48.9 billion and have informed regulators and participants that they could become insolvent within 20 years because they don’t have the money to pay the full promised benefits. These findings are from a new analysis by Cheiron Inc., the actuarial consulting firm, of the latest annual financial reports filed by multiemployer plans with regulators. Cheiron’s analysis comes as a bipartisan congressional panel faces a looming deadline to recommend solutions for the multiemployer pension plan crisis. “In just this past year, 15 more plans have informed regulators that they are failing,” said Joshua Davis, a principal consulting actuary at Cheiron who analyzed the filings. “While some plans are trying to meet their financial challenges by seeking permission to cut benefits, it appears that most plans are waiting to see if Congress can find a legislative solution.” Cheiron’s August 2017 study found 114 multiemployer pension plans were underfunded by $36.4 billion, based on the latest regulatory filings available at the time. Some plans have since terminated because all the employers withdrew. Even after removing these plans, the number of failing multiemployer pension plans increased by 6.1 percent, based on the latest publicly available information. The plans in this year’s study have total assets of $40.7 billion and liabilities of $89.6 billion. Just three of the plans account for $31.9 billion or 65 percent of the total unfunded liability of all the failing multiemployer pension plans and cover 567,625 participants or 43.7 percent of the 1.3 million participants of all the financially troubled multiemployer pension plans. The most notable addition is the New England Teamsters and Trucking Industry Pension Fund which has $5.1 billion in underfunding, second only to the Central States, Southeast and Southwest Areas Pension Plan. The United Mine Workers of America 1974 pension plan, with $3 billion in unfunded liabilities, dropped to the fourth place this year. A combination of factors led to the financial crisis of multiemployer pension plans—the downturn of the stock market during the Great Recession, declining industries resulting in fewer active participants, and employers exiting the plans either through bankruptcy or by withdrawing from the plans, leaving the remaining employers responsible for the unfunded liabilities. All the failing multiemployer plans informed regulators that they are in “critical and declining” status and expect to become insolvent within 20 years, as required by the Multiemployer Pension Reform Act of 2014. The study does not include plans that have already become insolvent or terminated because all the employers withdrew. Nor does it include plans that are termed “safe,” “endangered,” or “critical” under the law. The Pension Benefit Guaranty Corporation, the federal agency which guarantees participants a minimum pension even if their plans fail, has said that it expects its insurance program for multiemployer pension plans will run out of money by the end of 2025. The PBGC covers about 1,400 multiemployer pension plans with approximately 10 million unionized workers. Multiemployer pension plans, also known as Taft-Hartley plans, are industry plans that cover unionized workers and pensioners. They are jointly sponsored by employers and labor unions. Cheiron Inc. is an independent full-service pension and healthcare actuarial and financial consulting firm advising public employers, multiemployer plans, non-profit organizations and corporations. Cheiron Inc., November 1, 2018.
Recent research by Bee and Mitchell (2017) has refocused attention on the fact that the Current Population Survey (CPS) underestimates retirement income. In the wake of this study, some observers have questioned whether other surveys more frequently used by retirement researchers also understate retirement income and, if so, whether prior research suggesting that many households are unprepared for retirement is accurate. This paper addresses both questions by examining retirement income data from the CPS and four other surveys: 1) the Survey of Consumer Finances (SCF); 2) the Health and Retirement Study (HRS); 3) the Panel Survey of Income Dynamics (PSID); and 4) the Survey of Income and Program Participation (SIPP).  The paper compares the income measures from each survey to administrative data from tax and Social Security records, both in aggregate and across the income distribution.  It then uses a common measure of retirement income adequacy, the replacement rate, to assess overall household preparedness for retirement.
The paper found that:

  • The SCF, HRS, and SIPP capture nearly 100 percent, 96 percent and 93 percent of retirement income from administrative data, respectively, and provide largely consistent estimates across the income distribution.
  • The PSID captures over 80 percent of income from administrative data, with most of the underreporting occurring at the top of the income distribution.
  • The CPS is an outlier in terms of its ability to measure retirement income relative to administrative data, capturing just 61 percent. This underreporting exists at all points in the income distribution.
  • The estimates of median replacement rates vary from 55 to 91 percent, depending on the definition of pre-retirement income. Using a target replacement rate of 75 percent, these estimates imply that between 42 and 60 percent of households are at risk of falling short.  
  • The policy implications of the findings are
  • Research based on these datasets provides an accurate depiction of retirement income in the middle of the income distribution, while the SCF, HRS and SIPP are accurate throughout the distribution.
  • Estimates from these data indicate many households are still in danger of not having enough resources in retirement.

Anqi Chen, Alicia H. Munnell and Geoffrey T. Sanzenbacher, Center for Retirement Research at Boston College, November 2018, WP#2018-14.
The following items have recently been added to the Arbitration & Mediation section of the Financial Industry Regulatory Authority (FINRA) website.

  • Rulemaking Items Discussed at the FINRA Board of Governors September 2018 Meeting
  • Mediation Settlement Month
  • Mediation Settlement Day
  • Results of the Tenth Annual Securities Dispute Resolution Triathlon
  • Neutral Roster Demographic Survey: November 5 - 18
  • New York State Bar Association: Securities Arbitration & Mediation 2018
  • Statistics

Office of Dispute Resolution News

Rulemaking Items Discussed at the FINRA Board of Governors September 2018 Meeting
The Board approved filing with the SEC proposed amendments to: (1) extend the response time for non-parties to object to an order or subpoena from 10 calendar days of service to 15 calendar days of receipt of the order or subpoena; and (2) exclude first-class mail as an option to serve documents on the non-party and as an option for the non-party to file the objection to the scope or propriety of the order or subpoena. The proposed rule change would address arbitration forum users' concern that non-parties wanting to object to an order or subpoena have insufficient time to do so.

Mediation Settlement Month  
This year, FINRA extended Mediation Settlement Month from September 15 to November 15 to encourage more parties to experience the benefits of mediation for the first time, and to reinforce its value and effectiveness for those who have mediated already. During this 60-day period FINRA cuts its mediation fees in half, and participating mediators reduce their rates significantly.

Mediation Settlement Day     
On October 9, 2018, FINRA participated as a sponsoring organization for the kick-off event held at the Thurgood Marshall Courthouse. This year's theme was Access to Justice in Dispute Resolution. Participants discussed how Alternative Dispute Resolution (ADR) supports access to justice with programs like free and low-cost ADR services and explored other ways ADR programs could reach a broader audience. More than 100 guests attended the reception.

Financial Industry Regulatory Authority, November 2018.
“A right heart exceeds all.”
Why are they called "stands" when they are made for sitting?
Limitations live only in our minds. But if we use our imaginations, our possibilities become limitless. – Jamie Paolinetti
On this day in 1963, American President John F. Kennedy assassinated by Lee Harvey Oswald in Dallas, Texas.

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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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