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Fera Letter To Spitzer

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Here's a nutty legal concept - Fiduciary Responsibility. Perhaps the crime is that NYSUT has breached their fiduciary responsibility it has to its members to look after THEIR best interest and not line their own pockets.

 

I am glad that NYSUT discloses the money they are getting (assuming it is all disclosed), however they fail to disclose that they could have recieved a better deal by doing things differently. I bet the subject of the Wisconsin Education Assocation Trust never comes up on those pesky NYSUT letterheads....

 

NEA is guilty of non-disclosure (it isn't anywhere in any prospectus, website, and nobody will give you exact dollar figures) of 403(b) kickbacks - but they are also guilty of the same thing NYSUT is - and that is not working in their members best interest.

 

I think the unions may start to see things differently as the leadership is barraged by its members about how they are currently doing things.

 

I am no attorney either, but I can spot a breach of fiduciary responsibility when I see it.

 

ScottyD

 

 

Scotty, here's another nutty legal concept: Probable Cause. The last time I checked, an attorney general wouldn't waste his time trying to prosecute someone when even their most ardent opponents can't quite articulate a law that has been broken.

 

You say that NYSUT could have received a "better" deal. Better, of course, is in the eye of the beholder. NYSUT has created an environment wherein people who want to buy annuities from full-service providers are free to do so, and people who want to buy mutual funds from no-load companies are ALSO free to do so. I know everyone here would love to see a system where Vanguard, TIAA-CREF, T. Rowe Price et al are not only available, but mandated. "In the best interests of the members," of course. Tell me, who are you to define anyone's best interests but your own? There are no guns to heads here forcing anyone to invest a certain way.

 

 

FT: You reference FERA and me as being anti-union; yet the latimes is pro-union and they published the article. You need a dose of the : "logical thinking"

 

Joel

 

 

Oh, cool! We're using logic now? Thank God! Let's start right away. You all want Eliot Spitzer, an ATTORNEY GENERAL, to investigate NYSUT for possible violations of...what again? Which laws?

 

Remember that sticky little concept of probable cause. Without that, heck, Dan Otter might be open to a similar investigation, despite my virtual certainty that he, too, is guilty of no wrongdoing. Still, he takes money from TIAA-CREF (the site's advertising), and he does tout their products...I mean, even if that is fully disclosed, that doesn't make it legal, right?

 

(No offense intended at all, Dan. This is unfortunately the kind of absurdity we can face if people are allowed to initiate criminal investigations simply because they don't like a person, or a company, or a union, or a specific type of product.)

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Guest Sierra

NYSUT has created an environment wherein people who want to buy annuities from full-service providers are free to do so, and people who want to buy mutual funds from no-load companies are ALSO free to do so.

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I agree!! If they created this environment why didn't they remain neutral? Why are they recommending/endorsing one vendor/product, your Opportunity Plus/ING variable annuity over all the other offerings?

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I agree!! If they created this environment why didn't they remain neutral? Why are they recommending/endorsing one vendor/product, your Opportunity Plus/ING variable annuity over all the other offerings?

 

 

Who, exactly, would pay the most attention to such an endorsement? I would argue that it would be the neophyte investor in the greatest need of assistance. someone relatively new to the 403(b) world. Clearly, someone such as yourself who already knows the ABC's of investing and needs no assistance from an agent will go right to the no-loads. No need to pay for help you don't need, right?

 

Given that fact, you could argue that NYSUT would actually be committing a larger breach of its responsibility to its membership if their endorsement amounted to "Buy Vanguard, and educate yourself about it in your spare time!" Instead, mindful of the assistance that everyone here seems to agree most teachers need, they endorsed a product that provides that assistance, all the while doing nothing to restrict access to the no-load offerings that they know many people want.

 

 

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Guest Sierra

The union should be endorsing the importance of investing in a 403(b) plan. It should (at its own expense) be drilling this principle into the mindset of its membership. At its own expense it should be giving educational seminars about the basics of investing. It should explain what the ME fee is in a variable annuity and emphasize how this fee along with some others are a drain on the investment return. IT SHOULD NEVER BREACH ITS FIDUCIARY DUTY TO ITS MEMBERSHIP BY ENDORSING FOR A FEE ONE VENDOR OVER AN OTHER. BY SO DOING YOUR NYSUT HAS USED THE SPECIAL TRUST IT HAS WITH ITS MEMBERS TO RAISE REVENUE FOR ITSELF. THIS IS CALLED UNDUE INFLUENCE. THE MESSAGE IS LOUD AND CLEAR: YOU'RE DISLOYAL TO YOUR UNION IF YOU INVEST IN A 403B AND THE VENDOR IS NOT "OPPORTUNITY PLUS/ING/NYSUT"

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Just curious: does a union in fact have a fiduciary responsibility to its members when it endorses a financial plan? I would love to know the answer to this.

 

If so, then NEA has failed miserably with its Valuebuilder plan.

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Just curious: does a union in fact have a fiduciary responsibility to its members when it endorses a financial plan? I would love to know the answer to this.

 

If so, then NEA has failed miserably with its Valuebuilder plan.

 

 

What an excellent question. Such a responsibility is IMPLIED, of course, but is it explicit? I have no idea.

 

 

The union should be endorsing the importance of investing in a 403(b) plan. It should (at its own expense) be drilling this principle into the mindset of its membership. At its own expense it should be giving educational seminars about the basics of investing. It should explain what the ME fee is in a variable annuity and emphasize how this fee along with some others are a drain on the investment return. IT SHOULD NEVER BREACH ITS FIDUCIARY DUTY TO ITS MEMBERSHIP BY ENDORSING FOR A FEE ONE VENDOR OVER AN OTHER. BY SO DOING YOUR NYSUT HAS USED THE SPECIAL TRUST IT HAS WITH ITS MEMBERS TO RAISE REVENUE FOR ITSELF. THIS IS CALLED UNDUE INFLUENCE. THE MESSAGE IS LOUD AND CLEAR: YOU'RE DISLOYAL TO YOUR UNION IF YOU INVEST IN A 403B AND THE VENDOR IS NOT "OPPORTUNITY PLUS/ING/NYSUT"

 

 

The union actually DOES do all the things that you wrote about in small letters.

 

As for the stuff you yell about in ALL CAPS, hmmmm...NYSUT is "raising revenue for itself"? What becomes of that money? They claim it goes to the benefits department to administer their many programs...indeed, that since the benefits department is a non-profit trust, they use not a PENNY of dues money to run it. Do you have evidence to the contrary? Because if you can show me that NYSUT is somehow pocketing the cash, or buying yachts, or something other than what they say they are doing, I'll march in there right alongside you. Otherwise, of course, this is just another attempt to drum up outrage where none exists.

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Guest Joel F

So the FT, as an investor in NYSUT/ING is paying disproportionately more for union benefits than a NYSUT member that invests his 403(b) with a no-load firm. I find that terribly unfair to all those NYSUT members that invest in the union's edorsed product, ING. What would Elliot Spitzer say? Stay tuned.

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So the FT, as an investor in NYSUT/ING is paying disproportionately more for union benefits than a NYSUT member that invests his 403(b) with a no-load firm. I find that terribly unfair to all those NYSUT members that invest in the union's edorsed product, ING. What would Elliot Spitzer say? Stay tuned.

 

 

Here's one guess: "Hey, guys! Don't like paying more for union benefits? Choose one of the many cheaper options available to you! Problem solved. Also, please stop bothering me...there are REAL criminals to go after in New York."

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there are REAL criminals to go after in New York."

 

 

and hopefully Mr. Spitzer will after he reviews this situation

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there are REAL criminals to go after in New York."

 

 

and hopefully Mr. Spitzer will after he reviews this situation

 

 

Time for Ira to step up and play "Name That Crime!" And don't worry if you can't, Ira...no one else can, either.

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Guest Sierra

 

 

there are REAL criminals to go after in New York."

 

 

and hopefully Mr. Spitzer will after he reviews this situation

 

 

Time for Ira to step up and play "Name That Crime!" And don't worry if you can't, Ira...no one else can, either.

 

And that's why we have Elliot Spitzer.

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And that's why we have Elliot Spitzer.

 

 

...to see a crime where none exists? Ummm...OK.

 

You have cherry-picked so many different items in this argument that you've lost sight of the fact that virtually every objection you've made has been refuted.

 

* When the FERA letter was posted and praised, I pointed out that it was completely inaccurate in its charge that NYSUT fails to disclose its fee arrangement.

 

* When you characterized this as an "omission," I corrected you that it was not an omission, but rather a complete mischaracterization.

 

* When you said that "The union should be endorsing the importance of investing in a 403(b) plan. It should (at its own expense) be drilling this principle into the mindset of its membership. At its own expense it should be giving educational seminars about the basics of investing. It should explain what the ME fee is in a variable annuity and emphasize how this fee along with some others are a drain on the investment return." I pointed out that the union already does all that.

 

* When you have repeated the assertion that NYSUT is illegally pocketing money, I asked you for evidence of this. Not surprisingly, you have no response. At this point, I would settle for a RUMOR of wrongdoing, as long as it had at least a little substance to it! But you have nothing.

 

* When I have continually pointed out that no laws were broken, no crime has been committed, and the attorney general might therefore be forgiven for his complete lack of interest in the case since there appears to be NO JUSTIFICATION for pursuing it, no one has a response. Just the continued assertion that Spitzer should look into things, and a few vague rumblings about fiduciary responsibility. Ignored: the fact that no members were harmed financially or otherwise, since participation in a 403b program is voluntary, and the choices of providers are limited by the school districts, not the union. Why is there no call for Spitzer to open an investigation against the administrations of each and every school district in New York? Oh, that's right...because no-load funds are already available everywhere. Never mind.

 

As with all "conversations" with you, Joel, this one has become a dead end: circular, tortured logic that leads you where you want it to lead you. So have fun.

 

 

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I have some questions which may add to the union payback discussion.

 

When I worked for the los angeles schools, I wondered about the revenues and assets for UTLA (united teachers of los angleles) . I never spoke with anybody who knew this. Is this information public? Does anybody here know what their assets are? ), in what subcategories do they raise the money, ie member dues, vendor kickbacks, etc and what are the categories of their expenditures (that is we need ,common accounting information , a balance sheet and a profit and loss statement)?

 

I think that answers to the same questions about the national union organizations are critical to discussion underway.

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We are a law firm investigating these allegations. If you wish to provide information to us or to discuss your legal rights, you may conduct us at jfreeman@freemanlewis.com

 

Jennifer Freeman

Freeman Lewis LLP

228 East 45th Street

17th Floor

New York, NY 10017

jfreeman@freemanlewis.com

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