Don't agree with regulation proposal

Post #23,823 by bbronson 1/10/02 5:46:48 PM Reply	Don't agree with regulation proposal "What I would be in favor of, however, is a regulation for 401-K plans to prohibit investment in the company or company affiliates (subsidiary or parent or sibling). Otherwise, obvious serious conflicts of interest are possible. It's a bad idea, in any case, to have all your eggs in one basket." I'm assuming you mean preventing the employees from selecting company stock as their 401-K investment. I can't agree with your regulation idea. For every person who's prevented from losing their shirt from that regulation, we can find another that the regulation prevents becoming rich. Your last sentence says it all. People make choices. Some are good and some are bad. On principle, I think the government should not be in the business of preventing people from making what could be bad choices. Brian Bronson
Post #23,827 by Arkadiy 1/10/02 6:11:56 PM Reply	No blackouts on 401K A better regulation would probably prohibit company-imposed blackouts on stocks held in employees' 401k plans.
Post #23,900 by a6l6e6x 1/11/02 11:10:03 AM Reply	Re: Don't agree with regulation proposal Perhaps you have a point that total prohibition is a bit harsh, but certainly a limit in 10%-25% range to protect a 401-K retirement investment makes sense. Diversification of investment is key to risk management. If you were hell-bent on investing in your employer, nothing would prevent you from investing in your employer in your IRAs, or personal brokerage accounts. And then there are possibly stock options as well. The problem with 401-Ks is that the employer has a lot to do with how it's managed, what investment choices the employee has, how often an employee can shift investments from one choice to another, etc. Especially when the employer does some "matching" contributions, they may have a coercive influence on your choices. The choices you are given, in mutual funds let's say, may not be the best in any case. Often the employer gets a kickback (although they would never call it that) from the investment manager firm (e.g. T. Rowe Price) they select. The size of kickback may influence your company whom they pick when changes are made. The point is, although technically it's your retirement money, there are many aspects of its evolution you do not control. That's the part that bothers me. Alex Men never do evil so completely and cheerfully as when they do it from religious conviction. -- Blaise Pascal (1623-1662)

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