Benefits & ERISA Law

Madoff Victims Include Small Pension Plans

By Suzanne Wynn

Speculation over how many pension plans were defrauded of assets by Madoff came to a close yesterday with the publication of the long list of victims which has been filed with the Bankruptcy court handling Madoff’s assets. (hat tip to the Wall Street Journal)

One of the interesting points of the Madoff story when it comes to retirement and pension plans is that none of the 4 governmental agencies which regulate and audit retirement and pension plans saw Madoff coming. While the Dept. of Labor’s Office of the Inspector General has a history of playing a “very active role” in the U.S. Attorney General’s Pension Abuse Initiative, it somehow missed what may be the largest pension abuse case in history.

Yesterday, the Dept. of Labor did published three paragraphs of guidance directed at retirement and pension plans which had invested with Madoff. With the title of “Duties of Fiduciaries in Light of Recent Events Regarding Bernard L. Madoff Investment Securities LLC”, it advises:

“Where plan fiduciaries determine that plan assets were invested with Madoff entities and material losses are likely, appropriate steps should be taken to assess and protect the interests of the plan and its participants and beneficiaries. Such steps may include:
1. requesting disclosures from investment managers, fund managers, and other investment intermediaries regarding the plan’s potential exposure to Madoff-related losses;

2. seeking advice regarding the likelihood of losses due to investments that may be at risk;

3. making appropriate disclosrues to other plan fiduciaries and plan participants and beneficiaries; and

4. considering whether the plan has claims that are reasonably likely to lead to recovery of Madoff-related losses that should be asserted against responsible fiduciaries or other intermediaries who placed plan assets with Madoff entities, as well as claims against the Madoff bankruptcy estate.

Fiduciaries must ensure that claims are filed in accordance with applicable filing deadlines such as those applicable to bankruptcy claims and for coverage by the Securities Investor Protection Corporation (SIPC).”

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Full post as published by Pension Protection Act Blog on February 06, 2009 (boomark / email).