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Glen Tibble vs. Edison International


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Matt Bozek:

As a percentage, how many DC plans in the nation follow the due diligence steps the Court describes prior to placing retail class funds on the investment menu? If a large plan like Edison International did not it's safe to say that smaller plans also do not perform their due diligence. Once they do they will quickly determine that these harmful investments must be removed from the line-up lest they invite a lawsuit. This is why Tibble vs. Edison International is so vitally important to both ERISA and non-ERISA governmental plans. But, Matt, this is something you have been well aware of.

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Matt Bozek;

Would you please cite a case where a plan participant sued a DC plan for not placing retail class funds in the plan's investment line-up?

This might not be entirely directly on point, but as I recall, participants used to complain if they could not invest in their favorite mutual funds or otherwise in funds they could track from their daily newspapers (back in the days when everyone bought daily newspapers!). Whether it ever got to the point of generating litigation, I cannot recall.

This is just a guess, but is it possible that litigation has arisen in more than 0.1% of the plans offering only retail funds? You only hear about those where suits have been filed.

Always check with your actuary first!

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If their favorite fund was a retail class fund they paid a commission. So it wasn't "bought" it was "sold". It was "favored", not by the buyer, but by the commission salesperson to whom the commission it paid.

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