Alternative Investments in 401(k)s--WiIl this Train "Leave the Station?"

401(k) plan sponsors resist alternative investments despite Trump executive order

President Trump’s executive order encouraging greater use of alternatives in defined contribution plans sets up a traditional dilemma for an industry that doesn’t move quickly to embrace change: If they build it, will they come?

Although the executive order sets a more friendly tone for alternatives in DC plan menus, it will have to be fortified by legislation and/or regulation addressing sponsors’ concerns, said David O’Meara, head of defined contribution investment strategy at Willis Towers Watson.

For sponsors, “this order will be a slow-moving train — if the train leaves the station,” said O’Meara, adding that there is a “status quo bias” among DC plan fiduciaries.

“The big issue is the lack of regulatory guidance relating to (sponsors’) concerns of litigation,” he said. “Sponsors fear the courts are filling in the (regulatory) gaps. It’s not a place where they feel comfortable.”

JPMorgan’s OpenAI Coverage Is Just the Start

The trickle will soon be a flood.

Wall Street banks are starting to cover firms that are not publicly traded. JPMorgan Chase & Co. kicked off the trend with a report on OpenAI Inc. Citigroup Inc. followed suit a week later with a list of roughly 100 large private companies it will focus on, predominantly in the tech sector.

It’s only a matter of time that their peers join the ranks. With the US stock market at a record high, investment banks are keen to arrange secondary share sales for the hottest unicorns. Brokerage fees aside, they will have direct access to startup employees who want to divest their stakes. Banks’ wealth managers, in turn, can offer services to these newly minted billionaires when they cash out. It’s a lucrative business for all.

Latham Taps Harvey As Legal AI Race Heats Up

Latham & Watkins, the second largest law firm in the world, has announced it will be rolling out legal AI tool Harvey across its global offices, giving more than 3,600 lawyers access to the AI-driven platform.

Harvey, which is by backed by Chat GPT-creators OpenAI, announced on its third anniversary last week, that it had hit annual recurring revenue of $100 million, and serviced 42% of AmLaw 100 firms.

The tool first emerged as one of the early frontrunners in the legal AI space after legacy firm Allen & Overy became one of the first firms to announce it was deploying AI-driven technology in partnership with Harvey.

Tech Company CEO Charged With Securities And Wire Fraud After Gambling Away Seed Round Funding

United States Attorney for the Southern District of New York, Jay Clayton, and Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), Christopher G. Raia, announced the unsealing of an Indictment yesterday charging RICHARD KIM, the former Chief Executive Officer of Zero Edge Corporation (“Zero Edge”), with engaging in a scheme to defraud investors and prospective investors of Zero Edge by making false and misleading statements regarding the use of investor funds and subsequently misappropriating those funds. The case has been assigned to U.S. District Judge Lorna G. Schofield.

“As alleged, Richard Kim misled investors by promising that he would build a blockchain-based casino gaming app, but ironically Kim turned around and gambled away the very funds he said he would use to build a better casino,” said U.S. Attorney Jay Clayton. “Founders who abuse the trust of their investors threaten the integrity of our important and uniquely American venture capital market.”