James48843
Well-known member
It sure seems like the "I-Fund" that is the problem, NOT the folks that IFT to/from this Fund! Probably have said/heard this before - but its Tracy Ray and her cultists that should be taken to task by DOL for this travesty!
- And, I hope they are reading this
Yes- now that you mention it, I have done some more research into the area, and it looks like we may have a case.
Go take a look at 5 USC 8477(b). That is the clause that the lawyer at TSP is citing as authority to restrict fund reallocation by members.
5 USC 8477 says the fiduciary duty is simply this:
+++++++++++++++++++++++++++++++++++++++++++++
(b)(1) To the extent not inconsistent with the provisions of thischapter and the policies prescribed by the Board, a fiduciary shall discharge his responsibilities with respect to the Thrift Savings Fund or applicable portion thereof solely in the interest of the participants and beneficiaries and -
(A) for the exclusive purpose of -
(i) providing benefits to participants and their
beneficiaries; and
(ii) defraying reasonable expenses of administering the
Thrift Savings Fund or applicable portions thereof;
(B) with the care, skill, prudence, and diligence under the
circumstances then prevailing that a prudent individual acting in
a like capacity and familiar with such matters would use in the
conduct of an enterprise of a like character and with like
objectives; and
(C) to the extent permitted by section 8438 of this title, by
diversifying the investments of the Thrift Savings Fund or
applicable portions thereof so as to minimize the risk of large
losses, unless under the circumstances it is clearly prudent not
to do so.
++++++++++++++++++++++++++
Now, I don't know about you, but I would think that "Reasonable expenses" is pretty key here. They are saying that expenses are increasing because of trading. However, the math doesn't say that.
For example, in 2006, January throgh October (and I am using through October because year-to-date is not yet available for 07), the TOTAL expense of trading 10 billion dollars in the I fund was 11.5 million dollars, or 10.7 basis points.
Yet in 2007, the January through October TOTAL expense for trading 23 billion dollars, was just 13.5 million dollars, or 5.8 basis points.
In short, it cost HALF in 2007 what the costs were in 2006.
And there isn't a fund manager in the world who could testify in court that 5.8 basis points on trading 23 billion dollars in EAFE stocks is not a REASONABLE expense.
And, as a result of the trading, the I fund was able to turn in an INCREASED RETURN,. above and beyond the index it is supposed to track PURELY BECAUSE of the increase in the dollar amount in trading. In October alone, it returned 56 basis points above the index it tracks -BECAUSE OF INVESTOR REALLOCATIONS AND THE FAIR VALUE EFECT.
I think we have grounds to file a complaint with the Department of Labor on this one.
OK- reserach time. Where and how exactly does a person file a complaint with the Department of Labor regarding a breach of fiduciary duty by the Thrift Board?
Anyone here from the Department of Labor that can help us out with a place to file?
