Guest panzermanpanzerman Posted October 16, 2001 Posted October 16, 2001 Hello, everyone... Financial journalist checking in, preparing for an upcoming article. This is my first post, but this seems like a great board! What are the minimum fiduciary responsibilities, if any, a 401(k) sponsor has to plan participants? Have any been successfully sued for, say, allowing a 59 year-old employ to invest most of his plan into a high-tech fund that tanked right before he retired? What are the minimum standards--either by statute, caselaw, or common practice--of employee education regarding 401(k)s? Many thanks, Jason Ft. Lauderdale, FL
Erik Read Posted October 19, 2001 Posted October 19, 2001 Interesting questions - not sure you'll be answered directly, especially if your going to re-publish in an article. You may consider doing a blind search for "fiduciary responsability" on the board. There have been numerous cases lately, and you can find articles on most of them here. Good luck with your research. __________________ Erik Read, APR CKC
Guest Jennifer Reid Posted October 19, 2001 Posted October 19, 2001 You could research for months and still not come up with anything definitive. Much depends on the facts and circumstances of each particular situation. In general, you can look for articles, discussions, etc. of ERISA Section 404© and the veil of protection it is thought to offer plan fiduciaries that allow participants to direct the investment of their own plan accounts, and work outward from there to overall ERISA fiduciary "prudent man" concepts and standards if 404© protection is unavailable because of a failure to follow the requirements for obtaining such protection.
Jon Chambers Posted October 19, 2001 Posted October 19, 2001 There are no successful suits like the one you discuss (nor any unsuccessful ones that I'm aware of either). And given the way the fiduciary liability rules are structured, it's unlikely that such a suit would ever be filed. More likely (but I'm not aware of any actual suits) would be a class action alleging that the sponsor should never have offered a tech fund through the plan, because the option is inappropriate for the work force, and no one understood the risks implicit in the fund. The suits currently working through the industry generally have to do with self-dealing--either financial services companies offering their own proprietary funds through their plan, or companies encouraging employees to invest in stock of the company. These are generally class action, or seeking to be class action. Nothing is at the level of the individual participant, and frankly, the plaintiffs' attorneys don't want to take those cases, but the dollars involved are too small to justify the cost of litigation. We have acted as expert witness in some of these cases. I'd be happy to share comments and observations if you send me a private message. Jon C. Chambers Schultz Collins Lawson Chambers, Inc. Investment Consultants
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