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IN THIS EDITION

July 2011
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THE SUPREME COURT RULES THAT SECTION 10(b) OF THE SECURITIES EXCHANGE ACT OF 1934 DOES NOT APPLY TO "F-CUBED" CLAIMS
THE IMPORTANT, AND POTENTIALLY SHIFTING, REASONS FOR ALLOWING 401(K) PLAN PARTICIPANTS TO CHOOSE FROM A BROAD RANGE OF INVESTMENT ALTERNATIVES

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THE SUPREME COURT RULES THAT SECTION 10(b) OF THE SECURITIES EXCHANGE ACT OF 1934 DOES NOT APPLY TO "F-CUBED" CLAIMS

By Dan Ryan

On June 24, 2010, the United States Supreme Court issued its unanimous opinion in Morrison vs. National Australia Bank Ltd., 130 S.Ct. 2869 (2010), holding that § 10(b) of the Securities Exchange Act of 1934 ("the Exchange Act") does not apply extraterritorially, but applies only to transactions in securities listed on domestic exchanges and to domestic transactions in other securities. One commentator has opined that the decision seems to put an end to the so-called "f-cubed" cases - claims for violations of United States securities laws brought in United States courts by foreign-domiciled claimants who bought their shares in foreign companies on foreign exchanges.

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THE IMPORTANT, AND POTENTIALLY SHIFTING, REASONS FOR ALLOWING 401(K) PLAN PARTICIPANTS TO CHOOSE FROM A BROAD RANGE OF INVESTMENT ALTERNATIVES

By James Hynes

When an employee benefit plan, such as a 401(k) plan, contains an investment which declines in value, there is a corresponding decline in the value of individual participant accounts which contain that investment. Frequently, the declining investment is a fund which is primarily invested in the stock of the employer company. This often results in litigation under the Employee Retirement Income Security Act of 1974 ("ERISA"), including a claim that the fiduciaries of the plan, who are often directors or officers of the company, violated fiduciary duties of prudence by allowing the plan to be invested in company stock. In cases where the plan participants are allowed to choose their investments, it is often argued that it is imprudent to allow company stock to be included in the menu of available investment options.





This material does not amend, or otherwise affect, the provisions or coverages of any insurance policy or bond issued by Travelers. It is not a representation that coverage does or does not exist for any particular claim or loss under any such policy or bond. Coverage depends on the facts and circumstances involved in the claim or loss, all applicable policy or bond provisions, and any applicable law. Availability of coverage referenced in this document can depend on underwriting qualifications and state regulations.

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