Headlines about "Fiduciary duties of trustees, directors, others"

Gathered from the web by the editors at BenefitsLink.com.
Public Pension Funds to Lead Suit Against Bank of America
Excerpt: "A group of five public pension funds, including state funds in Ohio and Texas, have won the right to lead investor class-action lawsuits against the Bank of America Corporation over its acquisition of Merrill Lynch & Company. Judge Denny Chin of United States District Court in Manhattan granted lead plaintiff status on Tuesday to funds including the State Teachers Retirement System of Ohio, the Ohio Public Employees Retirement System and the Teachers Retirement System of Texas. Investors are accusing Bank of America of misleading them about the state of Merrill's health ahead of the Jan. 1 closing, even as it was becoming clear Merrill was on its way to what would be a loss of $15.84 billion in its fourth quarter." (The New York Times; free registration required)

[Guidance Overview] Avoiding Personal Liability for 401(k) and Retirement Plan Investments: From Fees to Losses (PDF)
6 pages. Excerpt: "Now is the time for ERISA risk management. Plan fiduciaries should engage in a deliberative process that demonstrates their attention to the 'money' issues involving plan investments ? from their selection, costs, and performance, to the credentials, terms, conditions, and costs associated with the professionals who recommend them. With this in mind, presented below are five general questions that all plan fiduciaries should be asking . . . and getting answered. They should drill deeper these days, which is why the Appendix [at http://blawweb.private.bloomberg.com/blaw/showDoc.pl?docId=91111944&summary=yes#APPENDIX#APPENDIX] lists the critical investment issues that plan fiduciaries should now be addressing with their advisors. ERISA demands careful attention to plan investments, and this is needed to protect plan fiduciaries from personal liability during these turbulent and unpredictable times." (Bloomberg Law Reports via Paul, Hastings, Janofsky & Walker LLP)

[Guidance Overview] Anheuser-Busch Sued Over QDIA Selection
Excerpt: "Anheuser-Busch has been hit with a federal court lawsuit alleging the beermaker and a trustee improperly designated an overly risky qualified default investment alternative (QDIA) for participants' cash proceeds from a stock sale. Employee David K. Parsons alleged that Anheuser-Busch was obliged under the Employee Retirement Income Security Act (ERISA) to pick a less risky QDIA in November 2008 to house funds in participants' accounts generated when InBev acquired Anheuser-Busch by paying shareholders $70 a share. Shareholders included participants who had built up blocks of stock through their pension plan. According to Parsons' complaint, which seeks class action status, Anheuser-Busch circulated a flyer to its employees just after the sale was completed telling them they would have until November 7 to choose an investment fund for the cash from their stock sale and that if they did not, the money would go to an 'Indexed Balanced Fund.'" (PLANSPONSOR.com; free registration required)

[Guidance Overview] Management and Oversight of Employee Benefit Plans: Good Governance
Excerpt: "I recently discussed the issue with Jeffrey D. Mamorsky, author of the Employee Benefits Handbook, published by West. Mamorsky is a shareholder at Greenberg Traurig, LLP in New York. He serves as employee benefits counsel to large multinational corporations and a variety of other organizations. [I asked]: How have the requirements for good governance in employee benefit plans changed?" (The Metropolitan Corporate Counsel)

[Guidance Overview] Directors' Duty to Monitor Met by 'Systematic Monitoring System'
Excerpt: "Conclusion: The court in Lingis was willing to give the directors 'the benefit of the doubt' when it came to whether or not they were regularly assessing the performance of the committee members due to the fact that they were only elected to one-year terms. The court held that this meant the directors had a 'systematic monitoring system' in place which, when coupled with the annual audit conducted by an independent auditor, would have been enough to show that the directors had fulfilled their monitoring duty under ERISA. While attorneys who regularly advise directors in this area would likely not consider the system to be a 'best practice' to emulate (without some improvement), it was certainly enough, in at least one court's view, to satisfy the duty to monitor under ERISA." (ERISA Fiduciary Guidebook)

[Guidance Overview] Waiver of Joint and Survivor Annuity Benefit Invalid If Plan Representative Breached Fiduciary Duty
Excerpt: "It's true that generally speaking a properly executed waiver cannot be challenged later by protestations from an aggrieved party regarding what her actual intent might have been. However, the court explained, plan representatives participating in the execution of such waivers have a fiduciary duty to disclose to the beneficiary material facts which the beneficiary should know for her own protection. If that duty is breached, then the waiver is invalid." (Wolters Kluwer)

DOL's Employee Benefits Security Administration Holding Compliance Seminar Series in Atlanta
Excerpt: "According to a press release, 'Getting It Right - Know Your Fiduciary Responsibilities,' a free compliance assistance seminar will be held in Atlanta on July 9 at the Federal Reserve Bank of Atlanta, 1000 Peachtree St. N.E. This seminar is part of EBSA's national fiduciary education campaign to increase awareness and understanding of basic responsibilities associated with operating private sector retirement plans. . . . Registration is first-come, first-served, with limited spaces available. All parties who wish to attend, including press, should contact Pat Humphlett by e-mail at humphlett.patricia@dol.gov or fax at 202-219-8141. More information is available at http://www.dol.gov/ebsa/pdf/FidEdGA.pdf[.]" (PLANSPONSOR.com; free registration required)

Seventh Circuit Comments on Denial of Petition for Rehearing in case of Hecker v. Deere
Excerpt: "The Seventh Circuit has denied a rehearing in the Hecker v. Deere case. . . . Plaintiffs, the Department of Labor and other interest groups had called for a rehearing. You can access a couple of the amicus briefs filed in the petition for rehearing on the Guidebook's 404(c) webpage. The Seventh Circuit made [several] points in response to the Amicus Brief filed by the DOL . . . ." (ERISA Fiduciary Guidebook)

[Guidance Overview] 7th Circuit Panel Limits Ruling's 404(c) Effects
Excerpt: "Faced with pressure to take another look at its February 2009 decision in a widely watched 401(k) excessive fee case, a federal appellate court has turned down the rehearing request but issued an addendum sharply limiting the earlier ruling's scope on the issue of 404(c) protections. While the three judge panel at the 7th U.S. Circuit Court of Appeals refused to disturb the court's earlier holding in Hecker v. Deere & Co., Circuit Judges Daniel A. Manion, Diane P. Wood and John Daniel Tinder made clear the Hecker decision was not intended as a sweeping statement to be broadly applied to all similar fee disputes." (planadvisor)

[Guidance Overview] Circuit Court Denies Rehearing on Dismissal of ERISA Revenue Sharing/Excess Fee Complaint in Hecker v. Deere (PDF)
3 pages. Excerpt: "Earlier this year, the U.S. Court of Appeals for the Seventh Circuit affirmed the dismissal of claimed ERISA violations for alleged revenue sharing and excessive fees against a retirement plan sponsor and the mutual fund complex that provided investment options and trust and other services for the plan. Yesterday, the Seventh Circuit denied plaintiffs' petition for rehearing but issued a short opinion addressing certain issues raised by the U.S. Department of Labor (DOL) in an amicus brief and emphasizing that its ruling was based on the particular facts alleged in this case. Hecker v. Deere & Co., Nos. 07-3605 and 08-1224 (June 24, 2009)." (Sutherland)

[Guidance Overview] ESOP Plan Sponsor Held Liable for Issuance of 10-Year Note to Satisfy Repurchase Obligation (PDF)
3 pages. Excerpt: "In a case recently decided by a federal district court in Indiana, Craig v. Smith, 2009 WL 438635 (S.D. Ind. Feb. 20, 2009), Ontario Corporation was held to have violated ERISA by issuing a 10-year promissory note in payment for shares that had been credited to the account of a former employee, Charles A. Craig, under the company's employee stock ownership plan (ESOP), as it violated the requirement that the term of any note issued in satisfaction of a terminated ESOP participant's put right could not exceed five years." (Morgan, Lewis & Bockius LLP)

[Guidance Overview] Federal Court Denies ESOP Participant Claims for Breach of Fiduciary Duty (PDF)
3 pages. Excerpt: "In Blankenship v. Chamberlain, 2009 WL 1421201 (E.D. Mo. May 20, 2009), the court considered a complaint with five counts, including two claims for breach of fiduciary duty under ERISA (one for injunctive relief and one for monetary relief), a common law claim for breach of fiduciary duty, a claim under Missouri state law to remove the defendant as an officer of the company and a trustee of the ESOP, and a claim for an accounting." (Morgan, Lewis & Bockius LLP)

[Guidance Overview] Smith Barney Fails to Get Florida Pension Case Moved Out of Court
Excerpt: "The U.S. District Court for the Southern District of Florida has declined to enforce arbitration clauses contained in account agreements between the City of Delray Beach Police and Firefighters Retirement System and Smith Barney. According to the court's decision, chairman of the retirement system's board William Adams signed Pension Consulting Agreements and other documents for Smith Barney. The agreements have an arbitration clause that says contract disputes must be resolved by arbitration. Smith Barney moved to remove the case from court and have the court direct the board to proceed through arbitration. However, the board argued that Adams lacked authority to execute the account agreements, and the court agreed." (PLANSPONSOR.com; free registration required)

[Opinion] Joint-Trade Letter Concerning H.R. 1988, 'The Conflicted Investment Advice Prohibition Act of 2009' (PDF)
2 pages. Excerpt: "Under ERISA, anyone providing investment advice to a plan or its participants or beneficiaries is already a fiduciary and subject to the highest standards of duty. There is no evidence of a violation of these standards, and Representative Andrews has not presented evidence of any problems with the current system. HR 1988 is not necessary. By establishing new barriers for firms who are well-qualified to provide advice, it will result in fewer American workers, including baby-boomers approaching retirement, receiving critically important investment advice." (U.S. Chamber of Commerce)

An Understanding of the Two-Hat Dilemma Is Essential to All Aspects of Fiduciary Responsibility
Excerpt: "There is an interesting article entitled 'Two-Hat Issues for Trustees' in the June 2009 Benefits & Compensation Digest. Although the piece deals with multiemployer trust funds in the private sector, many of the issues are common to public fund trustees (employee-elected vs. employer-appointed). What, then, is the two-hat issue, sometimes referred as the two-hat dilemma? A union official or employer wears the hat of a trustee when sitting on the board of a fund. His duty to participants and beneficiaries is often at odds with the trustee's loyalties to the entity (union or employer) that appointed the trustee. An understanding of the two-hat dilemma is essential to all aspects of fiduciary responsibility." (Cypen & Cypen)

[Guidance Overview] A Decided Victory for Plan Fiduciaries in Company Stock Case as Court Follows Lead of Hecker v. Deere
Excerpt: "In denying the plaintiffs' Motion for Summary Judgment and granting the defendants' Motions for Summary Judgment, the court held as follows: (1) Regarding the plaintiffs' argument that the plan failed to meet ERISA Section 404(c) by not disclosing 'in advance that liability would be shifted to Plaintiffs under the 404(c) plan', the court held that language in a prospectus satisfied that requirement. (2) Regarding the plaintiffs' argument that the plan failed to meet 404(c) by not adequately describing the investment objectives and the 'risk and return' characteristics of the investment options offered by the plan, the court pointed to a general benefits pamphlet which had been distributed to employees and contained a chart describing the investment alternatives." (ERISA Fiduciary Guidebook)

[Guidance Overview] Single Equity Fund Within Plan Did Not Give Rise to Violation of ERISA Diversification Requirement
Excerpt: "Plan participants' charge that single equity investment funds offered under a plan, rather than plan investments as a whole, were insufficiently diversified, did not state a claim under ERISA for fiduciary breach, according to the U.S. Court of Appeals in New York (CA-2) in Young v. General Motors Investment Management Corp. In addition, the participants did not allege sufficient facts to sustain a claim that fees charged by funds under the plan were excessive relative to the services rendered." (Wolters Kluwer)

EBSA Bringing Compliance Seminar to Chicago
Excerpt: "EBSA Brings its Compliance Seminar to Chicago June 19, 2009 (PLANSPONSOR.com) ? Chicagoland plan sponsors, fiduciaries, and providers can bone up on their fiduciary responsibilities next week. The U.S. Department of Labor's Employee Benefits Security Administration (EBSA) is sponsoring another of its free compliance assistance seminars, 'Getting It Right - Know Your Fiduciary Responsibilities,' on June 24 in Chicago, Illinois. The seminar is part of EBSA's national fiduciary education campaign to increase awareness and understanding of basic responsibilities associated with operating private sector retirement plans." (PLANSPONSOR.com; free registration required)

[Guidance Overview] Judge Says Motorola Didn't Breach Fiduciary Duties
Excerpt: "The U.S. District Court for the Northern District of Illinois ruled that Motorola Inc. and fiduciaries of its 401(k) plan did not breach their fiduciary duties under the Employee Retirement Income Security Act (ERISA) by continuing to offer company stock as an investment option in the plan. Granting summary judgment for the Motorola defendants, Judge Rebecca R. Pallmeyer said they were protected from liability under ERISA Section 404(c). The plaintiffs alleged that the defendants did not disclose in advance that liability would be shifted to them under the 404(c) plan, but Pallmeyer pointed out that a plan prospectus sent to participants clearly stated that the plan was intended to be a 404(c) plan with defendants not liable for participant investment decisions." (planadvisor)

[Guidance Overview] Tougher Financial Regulation Proposals May Hinder 401(k) Plan Sponsors
Excerpt: "The Obama administration's string of proposals to regulate the financial services industry may have some negative consequences for 401(k) plan sponsors, particularly smaller ones. Among the proposals, which were announced Wednesday, June 17, is one that would impose 'fiduciary duty' on brokers who provide investment advice, which is a more stringent standard than what they are held to today, experts say. Currently the legal standard that brokers must meet is a 'suitability test,' which means that the broker believes a specific investment option is a reasonable investment for a client of a certain age. The higher standard of fiduciary duty means that the broker is acting in the best interest of clients." (Workforce Management; free registration required)

[Guidance Overview] Company Directors and ERISA Fiduciary Status
Excerpt: "In this DOL Interpretative Bulletin issued over 20 years ago--29 CFR 2509.75-8 - Questions and answers relating to fiduciary responsibility under the Employee Retirement Income Security Act of 1974--the DOL answered this question: In the case of a plan established and maintained by an employer, are members of the board of directors of the employer fiduciaries with respect to the plan?" (ERISA Fiduciary Guidebook)

Recent Survey of Retirement Plan Sponsors Offers Some Worrisome Findings on Governance and Compliance Issues
Excerpt: "Central to the [Retirement Plan Survey 2009] is the finding that only 29 percent of plan sponsors polled report a clear chain of authority for their plan's governance committee, making it difficult for most of them to support certain fiduciary decisions if faced with a Department of Labor audit." (Human Resource Executive Online)

AIG Alleges Former Top Executive Plundered Retirement Plan
Excerpt: "The former top executive of American International Group Inc. plundered an AIG retirement program of billions of dollars because he was angry at being forced out of the company, a lawyer for AIG told jurors Monday at the start of a civil trial. Attorney Theodore Wells told the jury in Manhattan that former AIG Chief Executive Officer Maurice 'Hank' Greenberg improperly took $4.3 billion in stock from the company in 2005, after he was ousted by the company amid investigations of accounting irregularities." (AP via Google)

[Guidance Overview] DOL and Banks' $9.6M Settlement in Aloha Airlines Pension Dispute
Excerpt: "The U.S. Department of Labor (DoL) and two Hawaiian banks have worked out a $9.6-million settlement of a lawsuit over funds from Aloha Airlines' pension plans used to buy now-worthless shares of stock in the now-defunct air carrier's parent company. A DoL news release said the money from the suit against Aloha Airlines Inc., Bank of Hawaii and First Hawaiian Bank over plan losses from the stock purchase will be paid to the Pension Benefit Guaranty Corporation, which now runs the four plans from the bankrupt airline . . . ." (PLANSPONSOR.com; free registration required)

[Guidance Overview] Judge Throws Out Unpaid Contribution Collection Provision in Plan Document
Excerpt: "A federal judge in Massachusetts has ordered the sponsor of a master plan to strike a clause in its plan documents relieving the trustee of the duty to collect unpaid employer plan contributions. U.S. District Judge Douglas P. Woodlock of the U.S. District Court for the District of Massachusetts ruled that Employee Retirement Income Security Act (ERISA) Section 403 imposed the duty on a trustee to monitor and pursue unpaid employer contributions. A plan provision going against that obligation would be contrary to public policy and shouldn't be allowed to stand, Woodlock asserted." (planadvisor)

[Guidance Overview] Administrator Breach of Fiduciary Duties by Loaning Plan Funds to Start-Up Company
Excerpt: "EBIA Comment: Investments sometimes go awry. Fiduciaries are not required to guarantee good investment results -- but they are required to follow a prudent process when evaluating plan investments. To satisfy this 'procedural prudence' standard, fiduciaries should follow a thoughtful and prudent review and decisionmaking process and document the steps they have taken." (Employee Benefits Institute of America)

Detroit Pension Trustees Take Trips on Funds' Tab
Excerpt: "The trustees who oversee Detroit's two public pensions, their lawyers and staff spent $380,000 over the past year circling the globe to attend conferences -- often traveling in packs, with virtually no limitation on where they went or how often they traveled. Trustee Ronald Gracia spent the most time on the road -- billing the General Retirement System for $105,000 in travel, including three trips to Singapore and $18,600 on travel to Hong Kong, according to records provided by the pension funds." (Detroit Free Press)

[Guidance Overview] Complying with ERISA's Fidelity Bonding Requirements (PDF)
4 pages. Excerpt: "This Fidelity Bond Update answers common questions about ERISA's fidelity bonding requirements that The Segal Company frequently receives from our clients. In light of relatively recent guidance from the Department of Labor (DOL) in its Field Assistance Bulletin (FAB) No. 2008-04, The Segal Company is now able to give more specific answers than in previous issues of Fidelity Bond Update." (The Segal Group, Inc.)

Fiduciary Duty to 'Assess and Protect' Plan Interests
Excerpt: "It has been reported that there were many ERISA-covered retirement plans impacted by the Madoff-Ponzi scheme. As a result, the DOL issued a notice back in February . . . indicating that fiduciaries of ERISA plans should take 'appropriate steps' to 'assess and protect the interests of the plan and its participants and beneficiaries.' The DOL then went on to include in the notice a list of 'appropriate steps' for fiduciaries to take in fulfilling their duty to 'assess and protect' the interests of plan participants. One of those steps included filing and asserting claims against the bankruptcy estate." (ERISA Fiduciary Guidebook)

Key Issues 401(k) Plan Fiduciaries Need to Know (PDF)
2 pages. Excerpt: "Here is an outline of some of the issues that plan fiduciaries must consider in selecting and monitoring investment options and the costs associated with the management of plan investments." (Kelley Drye & Warren LLP)

Registered Investment Advisors: Fiduciaries for What? (PDF)
At p. 2 or 4-page newsletter. Excerpt: "Because of these issues, advisers need to be prepared for the high cost of litigation. Of course, fi duciary liability insurance is one way to do that. As a word of warning, don't rely on your malpractice, or errors and omissions, insurance to guard you against fiduciary breaches. Most have specific exclusions from fi duciary coverage." (Reish Luftman Reicher & Cohen)

Beyond Rebalancing -- Rethinking Long-term Asset Allocation
Excerpt: "[L]ooks at the topic of rebalancing from the perspective of today's plan sponsor, challenged with managing investment decisions in an extremely uncertain environment." (JPMorgan)

Chrysler Speeds Past Legal Limits in Race to Live; Bondholders, Step Aside!
Excerpt: "Today was supposed to be the day that Chrysler LLC sold itself to Fiat and embarked on a new, government-designed chance at survival. Instead, its lawyers are arguing in a federal appeals court this afternoon to please, please let the sale go through." (James Pressley on Bloomberg.com)

Chrysler Says Indiana Pension Funds Can't Win Appeal
Excerpt: "The Indiana pension funds challenging the sale of Chrysler LLC's assets to a group led by Fiat SpA can't win, and the deal is better than liquidating the company, Chrysler lawyers said in appeals court documents filed [Thursday June 4]." (James Pressley on Bloomberg.com)

[Opinion] Chrysler vs. Indiana: The Little Pension Fund That Could
Excerpt: "Now, the popular defense of the Indiana pension funds is that they have a fiduciary duty to their beneficiaries to maximize the value of their assets. (Hedge funds should have the same duty to their limited partners, unless I'm missing something, but let's set that aside.) There is a deal on the table worth 29 cents on the dollar. Apparently they think Chrysler can do better by finding a a higher bidder (not likely at this point), or they can get more in liquidation. But that is far from a certainty, and the value of Chrysler is deteriorating as time passes; and if they manage to drag this out past June 15, Fiat can back out of the deal. So it's not at all clear that their actions have a positive expected value for their beneficiaries." (Seeking Alpha)

[Guidance Overview] Fiduciary Exception Eclipses ERISA Fiduciary's Claim of Attorney Client Privilege
Excerpt: "This opinion involves consideration of the dimensions of the fiduciary exception to attorney-client and work product privileges. The issue arose in the context of district court review of plaintiffs' objections to a magistrate judge's ruling on a motion to compel." (Attorney Roy F Harmon III in the Health Plan Law blog)

Chrysler Enters Legal Homestretch in Case Brought by Indiana Pension Funds
Excerpt: "Invoking founding father James Madison and their rights under the Constitution, the Indiana pension funds argue that the government-orchestrated sale of most of Chrysler's assets violates numerous laws." (Washington Post; free registration required)

Court of Appeals Today Hears Indiana Pension Funds' Appeal of Chrysler Deal
Various Indiana state employee pension funds are contesting their treatment as bondholders, saying unsecured creditors are being favored ahead of Chrysler's bondholders. OppenheimerFunds filed a brief in support of the pension funds. (AP via New York Times)

Whats in a Target-Date Funds Name? Misled Investors and Troubling Results Might Lead to Crackdown
Excerpt: "The SEC is considering cracking down on the use of target-date retirement fund names that could be 'misleading or confusing to investors,' SEC Chairwoman Mary L. Schapiro testifies during a Senate subcommittee hearing." (Workforce.com)

Links to Surveys Relating to ERISA Fiduciary Performance and Litigation
Excerpt: "The following surveys contain some great information about how fiduciaries are doing and the risks that they are facing: . . ." (ERISA Fiduciary Guidebook)

EBRI Study Addresses Plan Demographics, Participants' Saving Behavior, and Target-Date Fund Investments
Excerpt: "This analysis explores (1) whether plan demographic characteristics would affect individual participant contribution rates and target-date fund investments and (2) equity glide paths for participants in relation to plan demographics by considering target replacement income and its success rate." (Employee Benefit Research Institute (EBRI))

[Opinion] Text of Comments Filed to Date re DOL/SEC Hearing on Target Date Funds and Similar Investment Options
The web page of hypertext links is published by the Employee Benefits Security Administration. (Employee Benefits Security Administration, U.S. Department of Labor)

No Bond Safe from Obama's 'Shared-Sacrifice' Plan
Excerpt: "Bondholders have a new risk to contend with -- the Obama administration's policy of 'shared sacrifice.'" (David Reilly on Bloomberg.com)

[Guidance Overview] Lack Of Due Diligence Resulted In ERISA Fiduciary Liability For Defaulted Loans from Welfare Trust
Excerpt: "This recent Ninth Circuit opinion provides a textbook example of imposition of fiduciary liability based upon imprudent investments. The presentation of the issue is facilitated by the complete absence of any due diligence by the defendant. The United Public Workers ('UPW') is a union that represents employees who work for either governmental employers or in the private sector. The Mutual Aid Fund trust ('MAF') was an employee benefit plan that provided hospitalization and related benefits for participating UPW members, UPW employees, and their dependants. . . ." (Attorney Roy F Harmon III in the Health Plan Law blog)

Indiana State Treasurer Appeals Chrysler Deal; Says Priority for Unsecured Creditors is Unacceptable
Excerpt: "Under the bankruptcy plan, money was mostly set aside for secured creditors, but not enough to cover the millions that will be lost by retired State Police officers and teachers in Indiana. . . . Chrysler wants to pay them 29 cents on the dollar. Indiana State Treasurer Richard Mourdock says that's unacceptable. 'This is the first time in American history when secured creditors, Indiana retirees got less than non-secured creditors. That is fundamentally wrong. It is a violation of the law,' he said hours after filing an immediate appeal to the plan." (WTHR.com)

Investing After Retirement: Consider TIPS as Part of Diversified Portfolio
Excerpt: "Your portfolio may be safe from losses, but that's no help if it doesn't keep up with the rising cost of living. Economists and investors differ on the outlook for inflation in the near term, but even slow steady price increases can take a toll. . . . For conservative, risk-averse investors who are also worried about the long-term inflation threat, there is one relatively simple solution: Treasury Inflation-Protected Securities, or TIPS, are bonds issued by the federal government that are guaranteed to keep pace with increases in the government-calculated consumer price index." (Business Week)

[Opinion] American Benefits Council Comments on H.R. 1988, the 'Conflicted Investment Advice Prohibition Act of 2009' (PDF)
3 pages. Excerpt: "The Conflicted Investment Advice Prohibition Act of 2009 (H.R. 1988) repeals the investment advice provision enacted in the Pension Protection Act of 2006 ('PPA'). The bill also prohibits several investment advice practices that existed prior to PPA and that do not involve conflicted advice. This document examines the non-PPA effect of H.R. 1988 [particularly 'SunAmerica' arrangements]." (American Benefits Council)

[Opinion] Interplay of Bankruptcy Laws and ERISA Fiduciary Law
Excerpt: "The Bankruptcy Case Blog has an interesting post . . . about how federal courts are split over the issue of whether fiduciary status under ERISA carries over into the federal bankruptcy laws. Excerpt: The federal courts are currently split on the issue of whether the functional definition of 'fiduciary' used in ERISA constitutes a 'fiduciary' for purposes of the section 523(a)(4) discharge exception when the ERISA fiduciary fails to comply with ERISA obligations." (ERISA Fiduciary Guidebook)

[Guidance Overview] Fiduciary Liability Insurance Policy Does Not Cover COBRA Violation
Excerpt: "In a recent case, a federal appeals court held that a fiduciary liability insurance carrier was not liable to an insured-employer for litigation expenses incurred by the employer in the defense of a lawsuit based (in part) on the employer's alleged failure to offer COBRA coverage. . . . In this case, the employer was left with no coverage for the costs of the kind of lawsuit it might reasonably have foreseen when it purchased the policy. Employers that maintain fiduciary coverage should conduct a careful review of all policy provisions and exclusions to ensure there are no gaps in coverage. (Mary Kay Holding Corp. v. Federal Insurance Co., 5th Cir. 2009)" (Hodgson Russ LLP)

Announcing a New Blog: ERISA Fiduciary Guidebook
Excerpt: "For some time now, I have had a great interest in starting a website devoted to following legal developments related to ERISA fiduciary law as the whole area seems to be exploding with developments and it is difficult to cover them all at this site. The new site can be found at www.fiduciaryguidebook.com and is called 'The Fiduciary Guidebook.' It is, of course, a work in progress. . ." (Attorney B. Janell Grenier via Benefitsblog.com)

[Guidance Overview] Second Circuit Affirms Dismissal of 401(k) Fee Lawsuit (PDF)
3 pages. Excerpt: "On May 6, 2009, the Second Circuit Court of Appeals affirmed the dismissal of two related actions, concluding that the plaintiffs failed to state claims based on allegations that plan fiduciaries failed to diversify plan investments and invested in funds that carried excessive fees. The Second Circuit's decision is unpublished, and hence carries no official precedential value. It nonetheless underscores the strict scrutiny that courts are increasingly applying to the plaintiffs' allegations in the high-profile 401(k) fee lawsuits." (Groom Law Group)

[Opinion] Is 'Your Mattress' a Valid Retirement Savings Option? The Implications of Financial Turbulence for Plan Sponsors (PDF)
7 pages. Excerpt: "In conclusion, current market conditions have participants worrying, rightfully so, about the security of the retirement investments, and, consequently, making the wrong decisions when trying to protect themselves. The decisions occur due primarily to fear and misunderstanding. It is incumbent upon Plan Sponsors to fully understand their participants and their participants' needs, and to design plans that provide the helpful investments and tools ? in all economic conditions." (National Association of Government Defined Contribution Administrators, Inc.)

[Guidance Overview] 401(k) Fee Litigation, May 2009 Update
The target page provides links to a 25-page paper titled: '401(k) FEE LITIGATION' and to a 38-page chart of 401(k) Fee Cases. (Groom Law Group)

[Guidance Overview] Guide to New Form 5500 Schedule C Reporting and Disclosure Rules Including Gifts and Gratuities (PDF)
10 pages. Excerpt: "A number of questions have been raised by the new rules governing Form 5500 Schedule C and related gifts reporting. This question and answer guide provides background information for CIEBA members. CIEBA wishes to thank Morgan, Lewis and Bockius, LLP for preparing this educational resource. This Guide is general in nature and does not constitute legal advice on any specific matter." (The Committee on Investment of Employee Benefit Assets)

[Guidance Overview] Tips to Keep the Company 401(k) Plan on Track
Excerpt: "Looking forward, there are several issues plan sponsors need to address in reviewing their plans, from the plan's governance to the choices of a low-risk investment option. . . . To keep their plans on sound footing, Mercer suggests that plan sponsors investigate 10 key issues: [1] Determine how much participants are paying in investment and plan administration fees. 'If you haven't benchmarked these fees in over a year, it is time for an update,' Mercer advises. 'Consider whether the market decline has jeopardized the fee guarantees under your contract, thus reducing your leverage in enforcing service-level agreements.'" (Institute of Management & Administration via insurancenewsnet.com)

How Does Your Investment Committee Stack Up Against Others?
Excerpt: "Whether you're a new or veteran committee member, you may wonder how your group compares with others in making investment decisions. Preliminary findings from the survey, conducted by Vanguard Investment Counseling & Research in late 2008, show that committees do many things right, but they also fall into some behavioral patterns that can prove counterproductive." (The Vanguard Group, Inc.)

[Guidance Overview] Radio Shack 401(k) Fiduciary Breach Case Plaintiffs Seek Class Action Nod
Excerpt: "Lawyers representing plaintiffs alleging a fiduciary breach in the operation of the RadioShack 401(k) have asked a federal judge to certify the suit as a class action to potentially represent as many as 13,000 current and former employees. The suit against the electronics retailer alleges the breach was committed by the company using Putnam mutual funds as investment options even though 'those funds were overpriced and underperforming and were selected to reduce defendants' expenses rather than for their merit.'" (PLANSPONSOR.com; free registration required)

[Guidance Overview] Indiana Employer Wins Mixed Ruling in Benefits Case
Excerpt: "An Indiana manufacturer has received a mixed ruling from a federal judge in a lawsuit alleging its misdeeds in the handling of its benefits program constituted a fiduciary breach. While U.S. District Judge Philip P. Simon of the U.S. District Court for the Northern District of Indiana threw out several of the Employee Retirement Income Security Act (ERISA) allegations against Sanlo Manufacturing Co., he ruled that plaintiff Keith Lewalski could move forward with other charges." (PLANSPONSOR.com; free registration required)

Give Your Retirement and Health Plans a Litigation Checkup
Excerpt: "At a time when plaintiffs' attorneys are probing employers' plans for systemic vulnerabilities that could lead to class-action suits and multimillion-dollar judgments, plan sponsors and fiduciaries should review their retirement and health plans and take steps to reduce the potential for litigation. Here are some areas for review." (Workforce Management; free registration required)

Wirehouses Add Fiduciary Reps in Effort to Win 401(k) Business
Excerpt: "As competition intensifies to capture the 401(k) and other retirement plan business of small and midsize companies, wirehouses increasingly are allowing representatives who specialize in the niche to act as fiduciaries. . . . The number of reps who serve in a fiduciary capacity varies greatly by wirehouse. UBS Financial Services now permits more than 300 reps to be fiduciaries, while St. Louis-based Wells Fargo Advisors and New York-based Morgan Stanley have 50 and 40 reps, respectively, who act in that role according to officials at the firms." (Investment News; free registration required)

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