30 Apr 2013 Cases

Primerica Arbitration

1 minute read


In this arbitration, Compass Lexecon was retained by Jay Cohen, Eric Stone, and others at Paul, Weiss, Rifkind, Wharton & Garrison LLP on behalf of their client Primerica to respond to allegations that Primerica and PFS Investments financial advisors inappropriately recommended that Florida teachers in the Florida Retirement System convert their state pension into a defined contribution investment plan. This conversion option offered by the Florida Retirement System allowed employees to take in a lump sum certain funds allocated to them and transfer those funds into an Investment Plan account in which the employee then becomes entirely responsible for all investment risks associated with and affecting the lump sum placed into the Investment Plan. In this matter, Claimants and their expert argued that the lump sum conversion and defined contribution plan was virtually guaranteed to provide a lower retirement income than the pension plan. At the arbitration, Harvard Professor and Compass Lexecon academic affiliate, Allen Ferrell, modeled both plan options and strongly criticized Claimants and their experts for ignoring market conditions at the time of conversion and desirable household diversification factors that made the conversion a reasonable option. The arbitrator’s ruling was a complete victory for Primerica. Professor Ferrell was supported by a team in Compass Lexecon’s New York office including Alex Rinaudo and Chris Fiore.

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