SPARK Institute Tries to Fend Off Company Stock Requirement

September 9, 2002 (PLANSPONSOR.com) - The lobbying arm of a retirement services industry group is pressing for lawmakers to drop a provision in pension reform legislation adding more legal responsibility to plan sponsors and others for giving investment information to participants about company stock.

The SPARK Institute, the lobbying arm of the Society of Professional Administrators and Recordkeepers, told the Senate Finance Committee and the Health, Education, Labor and Pensions Committee that the provisions in two reform bills would place an unfair legal burden on plan sponsors and administrators.

SPARK Institute president Robert Wuelfing said in a statement that plan sponsors and administrators could be held liable for “unintended and easily correctible mistakes and omissions.” 

SPARK Institute is battling Section 304 of S 1971 and Section 202 of S 1982 which require that participants with company stock investments get the same amount of investment material as securities laws requires be provided to other investors. Giving participants “materially misleading investment information” would be an ERISA violation, subject to a penalty of up to $1,000 per day.

Former employees of Enron and numerous other companies have alleged that their employers fed them false and misleading information to get them to keep buying company stock for their retirement accounts – even as the share price plummeted when the companies collapsed.

If Congress chooses to include the amendment in final Enron-related pension legislation, the Institute recommended that it be modified to:

• ensure that only the knowing and intentional provision of materially misleading investment information be treated as a fiduciary violation

• specifically tie the new standard for fiduciary violations to the new fiduciary duty to ensure that participants are provided with information regarding investments in employer securities

• apply the new fiduciary duty only to plan fiduciaries and not to non-fiduciary plan service providers.

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