New SEC Rules Offer Incentives to Whistleblowers

The US Securities and Exchange Commission has adopted new rules to expand its authority to reward whistleblowers with the use of financial incentives.

(May 26, 2011) — TheUS Securities and Exchange Commission (SEC) has adopted rules to create a whistleblower program that rewards individuals who provide the agency with high-quality tips that lead to successful enforcement actions.

The new rules, which passed by a vote of 3-2, could urge Wall Street whistleblowers and other industry insiders to come forward more frequently to alert the SEC about securities violations.

“For an agency with limited resources like the SEC, it is critical to be able to leverage the resources of people who may have first-hand information about violations of the securities laws,” said SEC Chairman Mary L. Schapiro in a statement. “While the SEC has a history of receiving a high volume of tips and complaints, the quality of the tips we have received has been better since Dodd-Frank became law. We expect this trend to continue, and these final rules map out simplified and transparent procedures for whistleblowers to provide us critical information.”

According to the regulator, the new SEC whistleblower program, authorized by the Dodd-Frank Wall Street Reform and Consumer Protection Act, is aimed at rewarding individuals who act to expose violations and who provide significant evidence that helps the SEC bring successful cases. Under the new program, awards will depend on the quality and timeliness of the information, which must lead to successful enforcement actions with sanctions of at least $1 million.

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To contact the <em>aiCIO</em> editor of this story: Paula Vasan at <a href='mailto:pvasan@assetinternational.com'>pvasan@assetinternational.com</a>; 646-308-2742

Prudential Completes First US Pension Buy-In Transaction

A North Carolina-based manufacturing company has used pension plan assets to purchase a “portfolio protected buy-in" policy, transferring investment and longevity risk to a Prudential Financial Inc. unit.

(May 26, 2011) — Prudential Retirement has completed its first US buy-in with a $75 million pension risk transfer.

North Carolina-based Hickory Springs Manufacturing Company selected Prudential’s Portfolio Protected Buy-in to complete the pension risk transfer transaction.

“With the help of our advisor BCG Terminal Funding Company, we selected Prudential Retirement because of its flexibility in structuring a solution that we feel will help us fulfill our fiduciary obligations and enhance our employees’ retirement security,” said Steve Ellis, Chief Financial Officer of Hickory Springs, in a statement. “We were impressed with the Prudential Retirement team’s expertise and continued focus on our business needs.”

Phil Waldeck, senior vice president and head of Prudential Retirement’s Pension & Structured Solutions business, added: “Prudential is pleased to be the first company to bring a pension buy-in to employers in the U.S. We are also honored to be Hickory Springs’ provider of choice.”

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The number of such pension risk transfer deals in the UK market has been growing in recent years as pensions seek to transfer their risk to banks and insurers. Pension consultancy Hymans Robertson recently showed that with $7.2 billion (£4.5 billion) of risk transfer deals completed last year, the second quarter of 2011 looks to be a record quarter for the number of buyin and buyout deals completed in the UK. James Mullins at Hymans stated in a release that by the end of 2012, one in four FTSE 100 companies would have completed either a buyout or a buyin.

“Our analysis illustrates that it won’t be long before £50 billion of pension scheme risk has been transferred to insurance companies and banks,” Mullins said. “2010 was the third successive year during which £8 billion of pension scheme risks were transferred via buy-ins, buy-outs and longevity swap deals. 2011 is likely to see a substantial increase above these levels.”



To contact the <em>aiCIO</em> editor of this story: Paula Vasan at <a href='mailto:pvasan@assetinternational.com'>pvasan@assetinternational.com</a>; 646-308-2742

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