In re BANC ONE INVESTMENT

UNITED STATES OF AMERICA 
Before the 
SECURITIES AND EXCHANGE COMMISSION 
 
 
SECURITIES EXCHANGE ACT OF 1934 
Release No.  55730 / May 9, 2007 
 
ADMINISTRATIVE PROCEEDING 
File No. 3-11530 
 
In the Matter of 
BANC ONE INVESTMENT 
ADVISORS CORPORATION 
and MARK A. BEESON,  
Respondents. 
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Order Approving a Modified Distribution Plan 
 
  
I. 
  
On June 29, 2004, the Commission issued an Order in the above-captioned matter 
instituting and simultaneously settling public administrative and cease-and-desist proceedings 
against Banc One Investment Advisors Corporation (“BOIA”) and Mark A. Beeson (the “BOIA 
Order”).  The BOIA Order found, among other things, that BOIA allowed excessive short-term 
trading (or market timing) in certain One Group mutual funds (“One Group”) from June 1999 
through May 2003 that was contrary to mutual-fund prospectuses and potentially harmful to 
One Group shareholders.  The BOIA Order directed that BOIA pay disgorgement of $10 million 
and civil penalties of $40 million, for a total payment of $50 million, and established a Fair Fund 
to provide for the distribution of those funds to injured investors.  The Order further directed that 
BOIA retain an Independent Distribution Consultant (“IDC”) and that BOIA require the IDC to 
“develop a Distribution Plan for the distribution of all of the disgorgement and penalties to be 
paid by BOIA pursuant to this Order, and any interest or earnings thereon, according to a 
methodology developed in consultation with BOIA and acceptable to the staff of the 
Commission and the independent Trustees of the One Group [Mutual] funds.”  Under the BOIA 
Order, BOIA retained Professor Joseph A. Grundfest to serve as the IDC.   
 
On June 20, 2006, Professor Grundfest submitted a proposed distribution plan (the 
“Plan”) that provides for the distribution of the $50 million paid by BOIA, plus accumulated 
interest, to investors who held shares in at least one of the One Group mutual funds in which the 
market timing occurred, on the days on which the market timing occurred, between June 1999 

 
2
and May 2003.  As required by the BOIA Order, the Plan, among other things, “provide[s] for 
investors to receive, in order of priority, (i) their proportionate share of losses from market 
timing, and (ii) a proportionate share of advisory fees paid by funds that suffered such losses 
during the period of such market timing.” (BOIA Order at ¶34(b)).  In determining each 
investor’s proportionate share of the Fair Fund, Professor Grundfest has developed an Allocation 
Algorithm to determine the amount of the Fair Fund each investor will receive.  
 
In accordance with the Commission’s Rules on Fair Fund and Disgorgement Plans (the 
“Fair Fund Rules”), 17 C.F.R. § 201.1100, et seq., the Plan proposed a Fund Administrator and 
sets forth, among other things, procedures for the receipt of additional funds; categories of 
persons potentially eligible to receive proceeds from the BOIA Fair Fund; procedures for 
providing notice to such persons of the existence of the fund and their potential eligibility to 
receive proceeds; procedures for the administration of the fund; and a proposed date for the 
termination of the BOIA Fair Fund.   
 
Under the Plan, Boston Financial Data Services, Inc. (“BFDS”), proposed in the Plan as 
the Fund Administrator, would not be required to post the bond generally required of third 
parties under Fair Fund Rule 1105(c).  Rather, the Plan incorporates several layers of protection 
for the BOIA Fair Fund.  Among other things, under the Plan:  (1) the Fund Administrator will 
have no custody, and only restricted control, of the BOIA Fair Fund; (2) the BOIA Fair Fund 
will be held by the United States Department of the Treasury, Bureau of Public Debt 
(“Treasury”) until immediately before checks or wires are transmitted to eligible investors; (3) 
upon transfer from Treasury, funds will be held in an escrow account, separate from the assets of 
the bank identified in the Plan (the “Bank”), until presentment of a check or wire; (4) upon 
presentment of checks or wire instructions, funds will be subject to “positive pay” or similar 
controls before honored by the Bank; (5) both the Bank and the Fund Administrator will 
maintain, throughout this process, insurance and/or a financial institution bond that covers errors 
and omissions, misfeasance, and fraud; and (6) the Bank will not control at any one time any 
portion of the BOIA Fair Fund greater than the Bank’s insurance coverage.   
 
On August 7, 2006, the Commission published the Plan and issued a Notice of Proposed 
Distribution Plan and Opportunity for Comment (Exchange Act Release No. 54280) pursuant to 
Rule 1103 of the Fair Fund Rules, 17 C.F.R. § 201.1103.  In response to the Notice, the SPARK 
Institute, Inc. (“SPARK”), the Coalition of Mutual Fund Investors (“CMFI”), Mr. W. Theodore 
Kuck (“Kuck”) and Merrill Lynch & Co., Inc. (“Merrill Lynch”) submitted public comments to 
the Office of the Secretary.  In general, the SPARK letter seeks relief on behalf of intermediaries 
for Non-IRA Retirement Accounts eligible for a distribution under the Plan from fiduciary 
obligations and costs that may arise from distributions under the Plan.  The CMFI letter, written 
on behalf of individual mutual-fund investors, expresses concern that the Plan’s procedures for 
identifying and distributing funds to the beneficiaries of omnibus accounts are insufficient, and 
may result in investors not receiving their distributions.  The Kuck letter, written by a beneficiary 
of a trust account managed by Bank One Trust Company (“BOTC”), expresses concern 
regarding the identification and compensation of the beneficiaries of BOTC managed accounts.  
The Merrill Lynch letter requests that it be allowed to credit distribution funds electronically to 
customer accounts and the addition of a limitation-of-liability provision to the Plan. 
 

 
3
After careful consideration, the Commission has concluded that the Plan should be 
modified to include additional procedures applicable to Non-IRA Retirement Accounts and a 
provision concerning limitation of liability, and should be approved with such modifications.  
The Commission has further determined that, for good cause shown, the bond required under 
Fair Fund Rule 1105(c) will be waived. 
 
II. 
 
A. Public Comments on the Plan
 
 
1.   The SPARK letter
 
 
SPARK is an organization whose members include “retirement plan service providers 
[“RSPs”] that will be responsible for reconstructing accountholder balance information, making 
allocations, receiving proceeds, and making distributions to plan participants who are the 
intended beneficiaries of a substantial portion of the distribution at issue.”  SPARK 
representatives raised two primary concerns in the comment letter: (1) the fiduciary obligations 
that the Plan may impose on RSPs by requiring that “...the record holder shall distribute the 
funds in accordance with applicable guidance ...issued by the Department of Labor [DOL]
1
”; 
and (2) the potentially burdensome costs that RSPs may have to bear in allocating distribution 
funds to the beneficiaries of those accounts.   
  
The Commission staff, Professor Grundfest, and SPARK’s General Counsel met to 
discuss SPARK’s concerns regarding Non-IRA Retirement Accounts (which represent less than 
4% of the BOIA Fair Fund).  Based on these discussions, Professor Grundfest recommends 
modifying the Plan to: (1) provide Non-IRA Retirement Accounts and plan-level fiduciaries with 
alternative methodologies for distribution that will likely significantly reduce the costs of the 
distribution; and (2) inform Non-IRA Retirement Accounts of their distribution amounts before 
the funds are actually distributed to them, to allow them time to determine an appropriate 
distribution methodology and to advise the plan fiduciary accordingly.  
 
                                                
 
1
 The DOL issued Field Assistance Bulletin No. 2006-01 (April 19, 2006) (“FAB”) regarding Fair Fund 
distributions to retirement plans in market-timing and late-trading matters and the duties of IDCs and retirement-
plan record-keepers and plan fiduciaries.  Among other things, the FAB provides that record-keepers that receive 
distributions on behalf of their employee benefit clients generally will assume fiduciary obligations.  The FAB 
explains that record-keepers may consider whether the costs of effectuating a distribution outweigh any benefit to 
the intended beneficiaries as well as other alternatives that would be consistent with its fiduciary obligations.  The 
FAB also describes that record-keepers may avoid assuming fiduciary status if they allocate funds according to the 
methodology set forth in the Plan or if the plan-level fiduciary approves of a distribution methodology determined 
by the record-keeper. 
 

 
4
2. The Merrill Lynch letter 
 
Merrill Lynch, one of the omnibus intermediaries that is expected to receive a distribution 
under the Plan, raised two concerns in a comment letter.  First, the comment letter noted that the 
Plan did not provide a “protocol” for distributing funds to the subset of opaque omnibus 
intermediaries that opt to have BFDS [Boston Financial Data Services, Inc.] calculate 
distribution amounts for its beneficiaries.  The comment letter further stated that mailing checks 
to those beneficiaries would require the unnecessary disclosure of personal identifying 
information and other sensitive customer data and requested that Merrill Lynch be allowed to 
credit funds electronically to customer accounts.  Professor Grundfest and BOIA are working 
with Merrill Lynch to implement its request to electronically credit customer accounts, for which 
changes to the Plan are unnecessary.   
 
Second, Merrill Lynch’s comment letter noted that the Plan does not contain a limitation-
on-liability provision for intermediaries “authorized to assist in the administration of the Fair 
Fund” and that Merrill Lynch would expect any such intermediaries to be covered by a 
limitation-on-liability provision.  Professor Grundfest has added a limitation-on-liability 
provision to the Plan.  However, the Commission cannot advise any such intermediary whether 
or under what circumstances this provision would apply, because whether the limitation would 
apply would depend upon the individual facts and circumstances for each intermediary.  The 
provision at page 8 of the Plan further notes that “this paragraph ... is not intended, nor should it 
be deemed to be, a representation to or an indemnification of the IDC or the Fund Administrator 
or their designees, agents and assistants by the Commission or the QSF [Qualified Settlement 
Fund]....” 
 
 3. The CMFI letter 
 
 CMFI represents the interests of individual mutual-fund investors.  In the comment letter, 
the Executive Director of CMFI expressed a concern that the Plan’s procedures for identifying 
and distributing funds to the beneficiaries of omnibus accounts are insufficient, and may result in 
investors not receiving their distributions.  He further commented that the Plan does not consider 
potential market-timing activities by others who are not the subject of the BOIA administrative 
proceeding.   
 
The Commission staff and Professor Grundfest met with CMFI’s Executive Director to 
address these concerns.  Professor Grundfest represented that BFDS and BOIA have already 
approached all known opaque omnibus intermediaries and obtained account information 
representing 99.5% of the Fair Fund.  This information rendered the bulk of CMFI’s concerns 
moot.  Further, the concern that the Plan does not evaluate possible market-timing activities of 
others outside of the administrative proceeding misinterprets the directive of the Order, which 
does not require Professor Grundfest to determine whether others engaged in market timing in 
the One Group mutual funds. 
 

 
5
4. The Kuck letter 
 
Mr. Kuck is a beneficiary of a trust account managed by Bank One Trust Company 
(BOTC), which invested in the One Group mutual funds at issue in the Order.  In his comment 
letter, Mr. Kuck expressed his concern that those beneficiaries may not receive a distribution to 
which they are entitled because the Plan does not specifically provide assurances that the 
beneficiaries of the trust account will be identified and properly compensated.  In addressing this 
concern, Professor Grundfest has represented that BFDS and BOIA have identified the 
underlying beneficiaries of the accounts managed by BOTC and that these beneficiaries will 
receive a distribution.   
 
B. Recommended Modifications to the Plan
 
 
In summary, Professor Grundfest recommends adding the following provisions to the 
Plan: 
 
• a procedure for notifying Non-IRA Retirement Accounts entitled to $1,000 or 
more of their respective final distribution amount in advance of distributing funds 
to those accountholders (Plan, ¶15(d)(a)); 
• language specifying the timing of distributions to Non-IRA Retirement Accounts 
(Plan, ¶15(d)(b));  
• alternative, less costly, distribution methodologies for Non-IRA Retirement 
Accounts (Plan, ¶¶15(d)(c)(i)(ii)); and 
• a limitation-of-liability provision (Plan, p. 8). 
 
These modifications provide additional flexibility and further facilitate distribution of the 
Fair Fund, but do not substantially alter the previously published Plan.  The Commission, in its 
discretion, does not believe that further modifications are necessary or that the recommended 
additions require re-publication of the Plan for further public comment. 
 
C.        The        Bond        Requirements        of Fair Fund Rule 1105(c) 
 
Fair Fund Rule 1105(c) provides: 
 
Administrator to Post Bond.  If the administrator is not a Commission employee, 
the administrator shall be required to obtain a bond in the manner prescribed in 
11 U.S.C. 322, in an amount to be approved by the Commission.  The cost of the 
bond may be paid for as a cost of administration.  The Commission may waive 
posting of a bond for good cause shown.   
 
17 C.F.R. § 201.1105(c).  The Commission believes that the risk-protection provisions of the 
Plan, discussed on page 5 in the “Appointment of an Administrator for the Fair Fund” section, 
constitute good cause for waiving the posting of the bond under Rule 1105(c).   
 

 
6
III. 
 
 Accordingly, IT IS ORDERED that: 
 
A. Pursuant to Rule 1104 of the Fair Fund Rules, 17 C.F.R. § 201.1104, the Distribution 
Plan is modified as described above, and approved with such modification;  
 
B. Pursuant to Rule 1105 of the Fair Fund Rules, 17 C.F.R. § 201.1105(a), Boston Financial 
Data Services, Inc. is appointed as the Administrator of the Plan in accordance with the 
terms of the Plan; and 
 
C. The bond requirement of Rule 1105(c) of the Fair Fund Rules, 17 C.F.R. 201.1105(c), is 
waived for good cause shown.  
 
 By the Commission. 
 
 
 
       Nancy M. Morris 
       Secretary 

UNITED STATES OF AMERICA 
Before the 

SECURITIES AND EXCHANGE COMMISSION 
 
 
SECURITIES EXCHANGE ACT OF 1934 
Release No.  55730 / May 9, 2007 
 

ADMINISTRATIVE PROCEEDING 
File No. 3-11530 

 

In the Matter of 

BANC ONE INVESTMENT 
ADVISORS CORPORATION 
and MARK A. BEESON,  

Respondents. 

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Order Approving a Modified Distribution Plan 
 

  
I. 

  
On June 29, 2004, the Commission issued an Order in the above-captioned matter 

instituting and simultaneously settling public administrative and cease-and-desist proceedings 
against Banc One Investment Advisors Corporation (“BOIA”) and Mark A. Beeson (the “BOIA 
Order”).  The BOIA Order found, among other things, that BOIA allowed excessive short-term 
trading (or market timing) in certain One Group mutual funds (“One Group”) from June 1999 
through May 2003 that was contrary to mutual-fund prospectuses and potentially harmful to 
One Group shareholders.  The BOIA Order directed that BOIA pay disgorgement of $10 million 
and civil penalties of $40 million, for a total payment of $50 million, and established a Fair Fund 
to provide for the distribution of those funds to injured investors.  The Order further directed that 
BOIA retain an Independent Distribution Consultant (“IDC”) and that BOIA require the IDC to 
“develop a Distribution Plan for the distribution of all of the disgorgement and penalties to be 
paid by BOIA pursuant to this Order, and any interest or earnings thereon, according to a 
methodology developed in consultation with BOIA and acceptable to the staff of the 
Commission and the independent Trustees of the One Group [Mutual] funds.”  Under the BOIA 
Order, BOIA retained Professor Joseph A. Grundfest to serve as the IDC.   

 
On June 20, 2006, Professor Grundfest submitted a proposed distribution plan (the 

“Plan”) that provides for the distribution of the $50 million paid by BOIA, plus accumulated 
interest, to investors who held shares in at least one of the One Group mutual funds in which the 
market timing occurred, on the days on which the market timing occurred, between June 1999 



 2

and May 2003.  As required by the BOIA Order, the Plan, among other things, “provide[s] for 
investors to receive, in order of priority, (i) their proportionate share of losses from market 
timing, and (ii) a proportionate share of advisory fees paid by funds that suffered such losses 
during the period of such market timing.” (BOIA Order at ¶34(b)).  In determining each 
investor’s proportionate share of the Fair Fund, Professor Grundfest has developed an Allocation 
Algorithm to determine the amount of the Fair Fund each investor will receive.  

 
In accordance with the Commission’s Rules on Fair Fund and Disgorgement Plans (the 

“Fair Fund Rules”), 17 C.F.R. § 201.1100, et seq., the Plan proposed a Fund Administrator and 
sets forth, among other things, procedures for the receipt of additional funds; categories of 
persons potentially eligible to receive proceeds from the BOIA Fair Fund; procedures for 
providing notice to such persons of the existence of the fund and their potential eligibility to 
receive proceeds; procedures for the administration of the fund; and a proposed date for the 
termination of the BOIA Fair Fund.   

 
Under the Plan, Boston Financial Data Services, Inc. (“BFDS”), proposed in the Plan as 

the Fund Administrator, would not be required to post the bond generally required of third 
parties under Fair Fund Rule 1105(c).  Rather, the Plan incorporates several layers of protection 
for the BOIA Fair Fund.  Among other things, under the Plan:  (1) the Fund Administrator will 
have no custody, and only restricted control, of the BOIA Fair Fund; (2) the BOIA Fair Fund 
will be held by the United States Department of the Treasury, Bureau of Public Debt 
(“Treasury”) until immediately before checks or wires are transmitted to eligible investors; (3) 
upon transfer from Treasury, funds will be held in an escrow account, separate from the assets of 
the bank identified in the Plan (the “Bank”), until presentment of a check or wire; (4) upon 
presentment of checks or wire instructions, funds will be subject to “positive pay” or similar 
controls before honored by the Bank; (5) both the Bank and the Fund Administrator will 
maintain, throughout this process, insurance and/or a financial institution bond that covers errors 
and omissions, misfeasance, and fraud; and (6) the Bank will not control at any one time any 
portion of the BOIA Fair Fund greater than the Bank’s insurance coverage.   

 
On August 7, 2006, the Commission published the Plan and issued a Notice of Proposed 

Distribution Plan and Opportunity for Comment (Exchange Act Release No. 54280) pursuant to 
Rule 1103 of the Fair Fund Rules, 17 C.F.R. § 201.1103.  In response to the Notice, the SPARK 
Institute, Inc. (“SPARK”), the Coalition of Mutual Fund Investors (“CMFI”), Mr. W. Theodore 
Kuck (“Kuck”) and Merrill Lynch & Co., Inc. (“Merrill Lynch”) submitted public comments to 
the Office of the Secretary.  In general, the SPARK letter seeks relief on behalf of intermediaries 
for Non-IRA Retirement Accounts eligible for a distribution under the Plan from fiduciary 
obligations and costs that may arise from distributions under the Plan.  The CMFI letter, written 
on behalf of individual mutual-fund investors, expresses concern that the Plan’s procedures for 
identifying and distributing funds to the beneficiaries of omnibus accounts are insufficient, and 
may result in investors not receiving their distributions.  The Kuck letter, written by a beneficiary 
of a trust account managed by Bank One Trust Company (“BOTC”), expresses concern 
regarding the identification and compensation of the beneficiaries of BOTC managed accounts.  
The Merrill Lynch letter requests that it be allowed to credit distribution funds electronically to 
customer accounts and the addition of a limitation-of-liability provision to the Plan. 

 



 3

After careful consideration, the Commission has concluded that the Plan should be 
modified to include additional procedures applicable to Non-IRA Retirement Accounts and a 
provision concerning limitation of liability, and should be approved with such modifications.  
The Commission has further determined that, for good cause shown, the bond required under 
Fair Fund Rule 1105(c) will be waived. 
 

II. 
 

A. Public Comments on the Plan 
 

1. The SPARK letter 
 
SPARK is an organization whose members include “retirement plan service providers 

[“RSPs”] that will be responsible for reconstructing accountholder balance information, making 
allocations, receiving proceeds, and making distributions to plan participants who are the 
intended beneficiaries of a substantial portion of the distribution at issue.”  SPARK 
representatives raised two primary concerns in the comment letter: (1) the fiduciary obligations 
that the Plan may impose on RSPs by requiring that “…the record holder shall distribute the 
funds in accordance with applicable guidance …issued by the Department of Labor [DOL]1”; 
and (2) the potentially burdensome costs that RSPs may have to bear in allocating distribution 
funds to the beneficiaries of those accounts.   

  
The Commission staff, Professor Grundfest, and SPARK’s General Counsel met to 

discuss SPARK’s concerns regarding Non-IRA Retirement Accounts (which represent less than 
4% of the BOIA Fair Fund).  Based on these discussions, Professor Grundfest recommends 
modifying the Plan to: (1) provide Non-IRA Retirement Accounts and plan-level fiduciaries with 
alternative methodologies for distribution that will likely significantly reduce the costs of the 
distribution; and (2) inform Non-IRA Retirement Accounts of their distribution amounts before 
the funds are actually distributed to them, to allow them time to determine an appropriate 
distribution methodology and to advise the plan fiduciary accordingly.  

 

                                                 
1 The DOL issued Field Assistance Bulletin No. 2006-01 (April 19, 2006) (“FAB”) regarding Fair Fund 
distributions to retirement plans in market-timing and late-trading matters and the duties of IDCs and retirement-
plan record-keepers and plan fiduciaries.  Among other things, the FAB provides that record-keepers that receive 
distributions on behalf of their employee benefit clients generally will assume fiduciary obligations.  The FAB 
explains that record-keepers may consider whether the costs of effectuating a distribution outweigh any benefit to 
the intended beneficiaries as well as other alternatives that would be consistent with its fiduciary obligations.  The 
FAB also describes that record-keepers may avoid assuming fiduciary status if they allocate funds according to the 
methodology set forth in the Plan or if the plan-level fiduciary approves of a distribution methodology determined 
by the record-keeper. 
 



 4

2. The Merrill Lynch letter 
 
Merrill Lynch, one of the omnibus intermediaries that is expected to receive a distribution 

under the Plan, raised two concerns in a comment letter.  First, the comment letter noted that the 
Plan did not provide a “protocol” for distributing funds to the subset of opaque omnibus 
intermediaries that opt to have BFDS [Boston Financial Data Services, Inc.] calculate 
distribution amounts for its beneficiaries.  The comment letter further stated that mailing checks 
to those beneficiaries would require the unnecessary disclosure of personal identifying 
information and other sensitive customer data and requested that Merrill Lynch be allowed to 
credit funds electronically to customer accounts.  Professor Grundfest and BOIA are working 
with Merrill Lynch to implement its request to electronically credit customer accounts, for which 
changes to the Plan are unnecessary.   

 
Second, Merrill Lynch’s comment letter noted that the Plan does not contain a limitation-

on-liability provision for intermediaries “authorized to assist in the administration of the Fair 
Fund” and that Merrill Lynch would expect any such intermediaries to be covered by a 
limitation-on-liability provision.  Professor Grundfest has added a limitation-on-liability 
provision to the Plan.  However, the Commission cannot advise any such intermediary whether 
or under what circumstances this provision would apply, because whether the limitation would 
apply would depend upon the individual facts and circumstances for each intermediary.  The 
provision at page 8 of the Plan further notes that “this paragraph … is not intended, nor should it 
be deemed to be, a representation to or an indemnification of the IDC or the Fund Administrator 
or their designees, agents and assistants by the Commission or the QSF [Qualified Settlement 
Fund]….” 

 
 3. The CMFI letter 
 
 CMFI represents the interests of individual mutual-fund investors.  In the comment letter, 
the Executive Director of CMFI expressed a concern that the Plan’s procedures for identifying 
and distributing funds to the beneficiaries of omnibus accounts are insufficient, and may result in 
investors not receiving their distributions.  He further commented that the Plan does not consider 
potential market-timing activities by others who are not the subject of the BOIA administrative 
proceeding.   
 

The Commission staff and Professor Grundfest met with CMFI’s Executive Director to 
address these concerns.  Professor Grundfest represented that BFDS and BOIA have already 
approached all known opaque omnibus intermediaries and obtained account information 
representing 99.5% of the Fair Fund.  This information rendered the bulk of CMFI’s concerns 
moot.  Further, the concern that the Plan does not evaluate possible market-timing activities of 
others outside of the administrative proceeding misinterprets the directive of the Order, which 
does not require Professor Grundfest to determine whether others engaged in market timing in 
the One Group mutual funds. 

 



 5

4. The Kuck letter 
 
Mr. Kuck is a beneficiary of a trust account managed by Bank One Trust Company 

(BOTC), which invested in the One Group mutual funds at issue in the Order.  In his comment 
letter, Mr. Kuck expressed his concern that those beneficiaries may not receive a distribution to 
which they are entitled because the Plan does not specifically provide assurances that the 
beneficiaries of the trust account will be identified and properly compensated.  In addressing this 
concern, Professor Grundfest has represented that BFDS and BOIA have identified the 
underlying beneficiaries of the accounts managed by BOTC and that these beneficiaries will 
receive a distribution.   
 
B. Recommended Modifications to the Plan 
 

In summary, Professor Grundfest recommends adding the following provisions to the 
Plan: 

 
• a procedure for notifying Non-IRA Retirement Accounts entitled to $1,000 or 

more of their respective final distribution amount in advance of distributing funds 
to those accountholders (Plan, ¶15(d)(a)); 

• language specifying the timing of distributions to Non-IRA Retirement Accounts 
(Plan, ¶15(d)(b));  

• alternative, less costly, distribution methodologies for Non-IRA Retirement 
Accounts (Plan, ¶¶15(d)(c)(i)(ii)); and 

• a limitation-of-liability provision (Plan, p. 8). 

 
These modifications provide additional flexibility and further facilitate distribution of the 

Fair Fund, but do not substantially alter the previously published Plan.  The Commission, in its 
discretion, does not believe that further modifications are necessary or that the recommended 
additions require re-publication of the Plan for further public comment. 
 
C. The Bond Requirements of Fair Fund Rule 1105(c) 

 
Fair Fund Rule 1105(c) provides: 
 
Administrator to Post Bond.  If the administrator is not a Commission employee, 
the administrator shall be required to obtain a bond in the manner prescribed in 
11 U.S.C. 322, in an amount to be approved by the Commission.  The cost of the 
bond may be paid for as a cost of administration.  The Commission may waive 
posting of a bond for good cause shown.   
 

17 C.F.R. § 201.1105(c).  The Commission believes that the risk-protection provisions of the 
Plan, discussed on page 5 in the “Appointment of an Administrator for the Fair Fund” section, 
constitute good cause for waiving the posting of the bond under Rule 1105(c).   
 



 6

III. 
 
 Accordingly, IT IS ORDERED that: 
 

A. Pursuant to Rule 1104 of the Fair Fund Rules, 17 C.F.R. § 201.1104, the Distribution 
Plan is modified as described above, and approved with such modification;  

 
B. Pursuant to Rule 1105 of the Fair Fund Rules, 17 C.F.R. § 201.1105(a), Boston Financial 

Data Services, Inc. is appointed as the Administrator of the Plan in accordance with the 
terms of the Plan; and 

 
C. The bond requirement of Rule 1105(c) of the Fair Fund Rules, 17 C.F.R. 201.1105(c), is 

waived for good cause shown.  
 
 By the Commission. 
 
 
 
       Nancy M. Morris 
       Secretary