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19 Matching News Items

1.  Will the DOL Fiduciary Rule Be the End of Solicitor Arrangements?
Fiduciary Matters Blog Link to more items from this source
Sept. 26, 2016
"IRA assets held by a Broker-Dealer (B-D) range between 40 and 80% of B-D total assets. However, many of these [financial advisors] know very little about ERISA fiduciary standard of conduct. This lack of knowledge increases B-D litigation risk as tens of thousands of misguided fiduciary missiles seek to secure new engagements or service existing clients. B-Ds will have to establish new training protocols in conjunction with compliance oversight to mitigate this risk."
2.  Fiduciary Case Against Novant Health Settles Early for $32 Million
Fiduciary Matters Blog Link to more items from this source
Nov. 10, 2015
"Defendants have agreed to pay $32 million and have agreed to very significant affirmative relief. Counsel for the plaintiff's will seek no more than $10,666,666 in attorney's fees and $95,000 in costs.... [T]he early settlement of this case suggests that the plan fiduciaries were engaging in conduct that did not meet the stringent standards of ERISA. While the allegations of real estate deals and money payments are dramatic, the fiduciary of the average plan can look to this lawsuit and settlement as an example that ERISA requires you to act in the best interest of plan participants at all times."
3.  Fiduciary Education Isn't a Best Practice, It's a Requirement
Fiduciary Matters Blog Link to more items from this source
Sept. 22, 2016
"[D]oes the adviser fully understand the risk associated with the recommendation and has the adviser fully educated the investor of all risks so s/he can make an informed decision? Furthermore, is the adviser educated on the role a recommendation might fill under an ERISA standard of care? In other words, the adviser not only needs to be educated about the products they recommend but also why the products recommended are prudent and meet the best interest standard of care."
4.  The Latest Tussey v. ABB Decision: Fiduciary Lessons Aplenty
Fiduciary Matters Blog Link to more items from this source
July 20, 2015
"If you are faced with the opportunity to reduce costs by using proprietary investments, consider documenting your reasons to adopt proprietary funds by answering the following questions: [1] Are we using proprietary funds? [2] Are we replacing an existing fund with a proprietary fund? [3] Have we selected proprietary funds based on the standards and criteria established in the [investment policy statement (IPS)]? [4] If an exception is necessary to use a proprietary fund, should we change the IPS standards and criteria permanently? [5] Are we using a proprietary fund because it is in the best interests of participants or because it reduces the cost to the Plan Sponsor? [6] How are we accounting for any additional revenue sharing from the use of the proprietary funds?" [Tussey v. ABB Inc., No. 2:06-CV-04305 (W.D. Mo. July 9, 2015)]
5.  Supreme Court Declines to Hear 'Would Have' vs. 'Could Have' ERISA Case
Fiduciary Matters Blog Link to more items from this source
June 29, 2015
"The 4th Circuit concluded that the defendants failed to have a prudent process because they failed to consider the best interests of the participants. The question then becomes, once you've shown a failure of procedural prudence, what can the fiduciary prove to show they still made the right substantive choice? The defendants wanted a standard that would have allowed them to put on evidence that a prudent fiduciary COULD have made the same decision. The plaintiffs, and ultimately the 4th Circuit, supported a standard where the defendant must show that a prudent fiduciary WOULD have made the same decision." [Tatum v. RJR Pension Investment Comm., No. 13-1360 (4th Cir. Aug. 4, 2014; cert. denied June 29, 2015)]
6.  Oracle Sued by Schlichter After Recent Cases Against Anthem, Reliance Trust, and BB&T
Fiduciary Matters Blog Link to more items from this source
Jan. 26, 2016
"[T]here has been a significant uptick in the number of ERISA fiduciary breach lawsuits filed in the last couple of months.... The most recent case filed was just last week against Oracle. The case against Anthem has received a lot of attention. But one that has slipped through the cracks a bit is against Reliance Trust and one its clients. This case may the first of its kind on this scale to go after an outsourced fiduciary who is not related to the plan sponsor. Finally, the case against BB&T will be familiar to readers as involving claims of a providers own in-house plan."
7.  Spano v. Boeing Excessive Fee Case Settles for $57 Million
Fiduciary Matters Blog Link to more items from this source
Nov. 6, 2015
"The following are some selected terms of the settlement: ... Boeing agreed to hire an independent fiduciary to approve the settlement ... If a technology sector strategy fund remains as a core option in the Plan, Boeing shall obtain an opinion and recommendation of an Independent Investment Consultant on the question of whether and how to provide participants access to a technology sector strategy as a core option.... The agreement acknowledged that Boeing has a cash target for their company stock fund, and have hired a fiduciary to monitor the cash levels."
8.  Lockheed Martin Settles Excessive Fee Lawsuit for $62 Million
Fiduciary Matters Blog Link to more items from this source
Feb. 23, 2015
"The last of the first wave of excessive fee lawsuits filed on September 11, 2006 in what many dubbed the 'Schlichter Blitzkrieg' has been settled.... Lockheed Martin has agreed to pay $62 million and implement extensive affirmative relief. According to the settlement agreement, Schlichter, Bogard & Denton will request up to $20,666,666 in attorneys' fees and reimbursement of up to $1,850,000 in costs, all to come out of the settlement amount ... The plaintiffs had alleged that the fiduciaries to the Lockheed Martin 401(k) plans cause the plans to pay excessive administrative fees and that the fiduciaries had imprudently managed the money market fund and company stock fund."
9.  On Remand, Tussey v. ABB Defendants Found to Breach ERISA But Win on Procedural Technicality
Fiduciary Matters Blog Link to more items from this source
July 10, 2015
"Without a doubt, the outcome of this decision has been driven by the unique procedural aspects of the case, rather than substantive ones. For ERISA fiduciaries that might take comfort, don't. The plaintiffs bar will adapt and the proper damages calculations as required by the court will be presented in all cases in the future. But even these plaintiffs may still get another bite at the apple, as they have every right to appeal the case again to the 8th Circuit, which must hear it[.]" [Tussey v. ABB Inc., No. 2:06-CV-04305 (W.D. Mo. July 9, 2015)]
10.  Plaintiffs Fail to Float Claim Past Federal District Court
Fiduciary Matters Blog Link to more items from this source
Mar. 26, 2015
"Unless Congress legislates new law, the [DOL] addresses the question raised by the courts, or the losing plaintiffs appeal to a higher court, it is looking like in most circumstances, float earnings are not considered plan assets.... At this point, a fiduciary must now determine whether it is important to continue the same governance activities of the past or abandon those activities as a waste of time. Of course, under the current short-term interest rate environment float earnings do not amount to much especially for small plans, so the question is where do we go from here?" [In re Fidelity ERISA Float Litig., No. 13-10222 (D. Mass. March 11, 2015)]
11.  Finding Value Under the New DOL Regime
Fiduciary Matters Blog Link to more items from this source
Nov. 17, 2016
"Assuming a Financial Institution has not fully adopted all the requirements imposed by the new regulation what happens to Financial Institution and the advisers they support if they are not ready? There are two options: [1] Establish a moratorium on the sale of any new products to new or existing clients along with a prohibition of providing recommendations/suggestions to existing clients. [2] Adopt some or none of the new requirements and continue providing recommendations with the understanding that since all the new requirements are not adopted, all compensation received is received without an exemption and is subject to disgorgement along with lost opportunity cost, potential penalties and/or excise taxes since the exemption does not apply."
12.  Third Circuit Grants Victory to Participants Challenging Church Plan Status
Fiduciary Matters Blog Link to more items from this source
Dec. 30, 2015
"Stated simply, this ruling holds the plan should have been complying with ERISA the entire time, but wasn't. The consequences are staggering considering state law, which applied in the absence of ERISA, usually has little or no requirements related to funding.... An even more concerning issue for sponsors of church plans where a church established the plan, but a church agency is maintaining it, is the court's footnote on who can properly be considered a church agency ... If this interpretation would be enforced, it would seriously undermine the use of the church plan exemption in almost all instances except those involving plans sponsored by actual churches or plans maintained by traditional church pension board[.]" [Kaplan v. St. Peter's Healthcare System, No. 15-1172 (3d Cir. Dec. 29, 2015)]
13.  First Church Plan Case Settles
Fiduciary Matters Blog Link to more items from this source
May 12, 2015
"[T]his settlement appears to be a significant victory for Ascension Health. The plaintiffs have agreed that they will no longer claim that the plan is subject to ERISA unless there is a major change in the law from either the Supreme Court, Congress, or the IRS. In exchange, Ascension Health has agreed to contribute $8 million to the plan, although we have no idea how much, if anything, they were already planning on contributing this year or how that amount compares to previous years.... Notably missing from the settlement is, what we believe was the point of the lawsuits in the first place, any funding standard that closely resembles that found in ERISA." [Overall v. Ascension Health, No. 13-cv-11396-AC-LJM (E.D. Mich. May 11, 2015)]
14.  Supreme Court Wrestles with Issues in Tibble v. Edison
Fiduciary Matters Blog Link to more items from this source
Feb. 25, 2015
"The mainstream media ... interpreted yesterday as hinting at a victory for the plaintiffs. But let's be clear: that's not necessarily a clear cut outcome.... Very unlikely they affirm the Ninth Circuit's test but almost as unlikely they simply reverse without providing guidance on what the duty to monitor looks like. So that leaves us somewhere in the middle[.]" [Tibble v. Edison International, No. 13-550 (9th Cir. Aug. 1, 2013; argued Feb. 24, 2015)]
15.  SIFMA's Fiduciary Comments Are Matter of Interpretation
fi360 Blog Link to more items from this source
Apr. 11, 2012
"The most recent focal point in the ongoing debate on what a universal fiduciary standard of care will look like and how it will be implemented centers around SIFMA's proposed framework and the reaction to it from a group of consumer and professional organizations."
16.  Plaintiffs Score Victory Before Supreme Court in Tibble v. Edison
Fiduciary Matters Blog Link to more items from this source
May 18, 2015
"The decision reversed an earlier 9th Circuit ruling that ... a claim involving a plan investment that was initially chosen outside the 6 year window from when a lawsuit is brought could only be viable if there was a change in circumstances that would cause a fiduciary to reexamine the fund's inclusion in the plan. The Supreme Court rejected this interpretation, finding that under ERISA, there is a continuing duty to monitor and remove imprudent investments. Today's decision also effectively reversed rulings in the 4th and 11th Circuits that were similar to the 9th Circuits.... Different Justices of the Supreme Court showed during oral arguments that they struggled with the question of exactly what this continuing duty to monitor looks like. Rather than resolve the question, they have remanded the case back to the 9th Circuit to decide what the duty to monitor requires and whether the plaintiffs here met that burden to have viable claims. But they did so while also providing important context from trust law." [Tibble v. Edison Int'l, No. 13-550 (U.S. May 18, 2015)]
17.  Procedures for Meeting Fiduciary Responsibilities Should Be Reviewed Periodically
fi360 Blog Link to more items from this source
Sept. 26, 2012
"Fiduciary duties are generally presented as distinct obligations substantiated through law and regulation. Many of the duties are accompanied by documentation and review obligations. As a practical matter, a comprehensive framework is needed to ensure that all applicable fiduciary practices are fully and effectively addressed on an ongoing basis. A planned approach to conduct periodic reviews provides such a framework."
18.  Ninth Circuit Rules That ERISA Fiduciary Responsibility Can Apply to Company Decisions
ERISA Lawyer Blog Link to more items from this source
Aug. 10, 2009
Excerpt: In Johnson v. Couturier, Nos. 08-17369, 08-17373, 08-17375, 08-17631 (Ninth Circuit 2009), the Court broadened some of the thinking on the application of ERISA. In this case, in his capacity as president and a director of Noll Manufacturing Company and its successors ('Noll'), the defendant, Clair R. Couturier, Jr. had channeled $34.8 million of company assets to his own possession by applying that amount to buy out certain deferred compensation agreements (the 'Buy Out'). Couturier was also a trustee of Noll's employee stock ownership plan (the 'ESOP'). The plaintiffs, who are participants in the ESOP, filed suit against Couturier alleging breach of fiduciary duties under ERISA. The Court faced a number of issues, including some interesting ERISA matters.
19.  The 401(k) Fee Blame Game: Who's Next?
Pension Risk Matters Link to more items from this source
Oct. 20, 2006
Excerpt: According to attorney Stephen D. Rosenberg, author of the Boston ERISA & Insurance Litigation Blog, 'Given the number of different advisors and other players involved in the operations of these types of retirement vehicles, there are bound to be plenty of fiduciaries - as that term is understood in the context of ERISA - involved in almost any 401(k) plan, making for plenty of targets for such suits.'

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