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News Items, by Subject

Fiduciary duties of trustees, directors, others


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Headlines

Text of Amicus Brief to 10th Circuit, in Support of Stable Value Fund Providers in Fiduciary Litigation
"The growth of stable value offerings has been an enormous boon to sponsors and participants, helping to safeguard retirement benefits for millions of Americans. Unfortunately, Plaintiff would turn one type of these valuable products into a magnet for wasteful litigation. Treating general account stable value fund providers as functional fiduciaries would severely curtail stable value funds and potentially drive those providers out of the market entirely. Such an outcome is not just bad policy but also bad law[.]" [Teets v. Great-West Life & Annuity Insurance Co., No. 18-1019 (10th Cir. July 17, 2018)] (American Benefits Council)
Fidelity Backs Away from Being 'Point in Time' Fiduciary for 401(k) Plans
"Fidelity Investments no longer will serve as a fiduciary when it helps employers select investments for their 401(k) plans, moving away from a policy the firm adopted last year in response to the [DOL's] fiduciary rule.... Fidelity was the only record keeper that said it would adapt by providing services as a fiduciary under the new regime ... However, given the DOL rule's fate, the level of investment guidance is again considered non-fiduciary under ERISA, and Fidelity has distanced itself from the 'fiduciary' label as a result." (Pensions & Investments)
[Opinion] Be Wary of 401(k) Robo-Fiduciaries -- Especially the Human Ones
"Some institutional consultants have turned to the outsourced chief investment officer model, while others have moved down-market. Mercer created a robo-fiduciary called '401kWise' that offers to serve as the plan administrator and named fiduciary for even the smallest 401(k) plan, promising reduced costs and better outcomes, which includes financial wellness. But the chances for success are limited because 401(k) plans are sold, not bought. Few plan sponsors are likely to abandon a person for a phone number." (InvestmentNews)
Brown University Wins Dismissal of Many Claims in 403(b) Plans Challenge
"[The District Court judge] found the plaintiffs' allegation that a prudent fiduciary would have chosen one -- rather than two -- recordkeepers suffices to state a plausible claim. In addition, he said the plaintiffs' claim that a prudent fiduciary in like circumstances would have solicited competitive bids plausibly alleges a breach of the duty of prudence." [Short v. Brown Univ., No. 17-318 (D.R.I. July 11, 2018)] (planadviser)
Lessons Learned from Recent Litigation Involving ESOP-Owned Companies (PDF)
28 presentation slides. "Recent litigation and audit activity is focusing on the process undertaken by fiduciaries in connection with a transaction involving an ESOP." (McDermott Will & Emery)
[Opinion] How to Keep HSAs From Cannibalizing Retirement Savings
"Anytime we can help a participant understand how to prioritize and spend their 'next best dollar' we should jump on that opportunity. It makes sense that the HSA should be integrated with any retirement discussions. Most health brokers are not licensed to talk about investments and retirement savings ... [As] long as the retirement industry leads the discussion and not the health broker, we should be in good shape. This just adds to the need of better communication and education. Which now points back to more resources are needed from adviser teams to provide this type of education." (Fiduciary News)
Interesting Angles on the DOL's Fiduciary Rule, Part 98
"[A] broker-dealer will need to justify recommending a higher-cost investment (over another reasonably available, but lower-cost alternative). However, if there are two similar investments (including costs), but one pays the broker-dealer (and the financial advisor), more than the other, and it is better for the investor, then it could be recommended under the best interest standard. The inverse of that, though, is that the higher cost (and higher compensating) alternative cannot be recommended unless there are different characteristics and features that justify the cost." (FredReish.com)
Checksmart Wins Dismissal of 401(k) Excessive Fee Lawsuit
"The proposed class action, filed two years ago by Checksmart employee Enrique Bernaola, made waves in the financial industry for being one of the first to challenge alleged excessive fees in a smaller 401(k) plan.... [The federal district court judge ruled that the participant's] claims were barred by ERISA's statute of limitations because the expense ratios for the various investment options offered by the plan were disclosed to him three years before he filed his lawsuit." [Bernaola v. Checksmart Financial LLC, No. 16-684 (S.D. Ohio July 12, 2018)] (Bloomberg BNA)
The Fiduciary Rule May Be Dead, But Fiduciary Responsibility Isn't
"Nevada, New York and Massachusetts have taken steps to provide greater fiduciary protections through law changes and enforcement. Other states may follow their lead.... [T]here are issues whether states are permitted to act in this area due to ERISA preemption, and the status of these laws and state enforcement is not clear." (PenChecks)
Court of Appeals Officially Nullifies Fiduciary Rule, DOL Extends Nonenforcement Policy
"[At] least 79% of sponsors charge recordkeeping fees to plan participants (through direct fees, netting from investments or both).... [M]ore than 80 lawsuits have challenged the reasonableness of plan fees paid from plan assets, some of which have resulted in multimillion-dollar settlements. These lawsuits underscore the need for monitoring the reasonableness of plan fees and documenting the process." (Willis Towers Watson)
Brown University Retirement Plan Lawsuit Advances
"The workers can move on with their claims related to record-keeping services, including that Brown acted imprudently by using more than one record-keeper, not employing competitive bidding in its selection, and allowing the plans to pay excessive administrative fees ... The workers also can advance their claim that the university breached its fiduciary duties by selecting more expensive funds with poor historical performance, such as the CREF stock account and the TIAA real estate account[.]" [Short v. Brown Univ., No. 17-318 (D.R.I. July 11, 2018)] (Bloomberg BNA)
Should Participant Behavior Influence Investment Lineup Offerings?
"[T]here are, we think, significant reasons for saying 'No': ... [T]here's the difficulty of determining whether participants are moving money from a fund due to underperformance or for other reasons.... [By] engaging participants on their reasons for the actions taken are fiduciaries obligating themselves to provide counter arguments or explanations justifying the decision to continue holding the fund(s)? ... If participants deeply disfavor a particular fund offering, even though the investment guidelines favor it, might there be some obligation to replace it with a similar fund that participants perceive more favorably? If so, is this a weighty enough consideration to balance the negatives noted above?" (Fiduciary Plan Governance, LLC)
[Guidance Overview] Interesting Angles on the DOL's Fiduciary Rule, Part 97
"The proposed best interest standard for broker-dealers will apply only to securities transactions recommended to 'retail customers.' ... [Compare] that to the SEC's Interpretation for RIAs, which applies to all advice to all clients. This article gives examples of how the proposals will differ when applied to common scenarios." (FredReish.com)
Governance Checklist for Today's Investment Committees
"Tasks that were once the purview of an investment committee (e.g., manager selection and rebalancing) are increasingly delegated to investment staff or transferred to an outsourced chief investment officer (OCIO) partner.... The biggest change in the investment committee's responsibilities occurs with the activities that fall between defining the objectives and monitoring progress towards those objectives. Namely, the design and implementation of the investment strategy." (Russell Investments)
Fiduciary Standards for State and Local Government Retirement Plans
"To determine the responsibilities of trustees and other fiduciaries of state and local government plans, one needs to look to the statutes and regulations of the particular state. Interestingly, the language concerning fiduciary duties in many state statutes looks a lot like ERISA's.... A few states specifically incorporate ERISA provisions or DOL rules into their laws." (J.P. Morgan Asset Management)
Selecting Socially Responsible Retirement Plan Investments
"Although prior guidance allowed an ESG factor to be an integral part of the economic analysis when considering an investment option and to serve as a tie-breaker, the FAB now walks this back and provides that using an ESG factor would only be appropriate if the ESG factor could be treated as an economic consideration by itself, meaning that a qualified investment professional would treat the factor as an economic consideration under generally accepted investment theories." (Fulcrum Partners LLC)
Proposed Securities Legislation Could Affect 401(k) Participants' Rights
"The proposed legislation's goal is to federalize securities fraud actions by preempting any and all state laws that even indirectly touch on securities fraud. The result would be that all securities fraud litigation and enforcement would need to take place at the federal level.... [In addition,] the SEC is considering allowing companies to adopt mandatory arbitration clauses for shareholders -- an idea which is opposed by most 401(k) participant advocates on the grounds that it would effectively kill recovery chances for most 401(k) plan participants alleging securities fraud violations." (Compliance Dashboard)
Lawsuit Alleges Fraud by Matrix Trust in Connection with Theft by TPA
"[P]laintiffs claim that [Matrix Trust Company, custodian for the plans administered by Vantage Benefits,] 'fraudulently transferred at least three million dollars from the Section 403(b) plan accounts in its custody ... The plaintiffs say that these 'unsanctioned' transfers were taken from at least five 403(b) plans and deposited into a private Bank of America business account maintained by Vantage or its agents." (National Tax-Deferred Savings Association [NTSA])
How The DOL Fiduciary Rule Changed Norms
"[FAB 2018-02] states that prohibited transaction claims will not be brought against advisors who 'are working diligently and in good faith' to satisfy the impartial conduct standards set forth in the DOL rule exemptions.... Because the FAB is still in place, the impartial conduct standards essentially remain in place ... While not as strict as the fiduciary definition set out in the Investment Advisors Act of 1940, the five-part test is still a tough standard on ERISA fiduciaries.... [T]he application of the 1975 rules will most certainly be broader than in the past[.]" (InsuranceNewsNet.com)
DOL and Thrivent Ask Judge to Keep Fiduciary Rule Case Open
"The parties agreed that despite an appeals court decision that struck down the fiduciary rule in its entirety, its related litigation hasn't been finally resolved ... Last week, Judge Barbara M.G. Lynn -- the judge in Texas whose ruling upholding the fiduciary rule was reversed by the Fifth Circuit decision -- issued an order asking 'any party seeking further relief in this action' to notify the court of that intent by July 12.... The time hasn't yet run for the potential intervenors ... to seek further review of that denial, the DOL and Thrivent said." (Bloomberg BNA)
Questions to Ask Your Health Benefits Broker to Make Sure the Price Is Right
"Just as in retirement plans, in the health benefits market there can be conflicts of interests between providers that drive up costs for employers and employees and result in decisions being made that are not in the best interest of participants.... [If] employers ask, 'What kind of commissions and bonuses do you receive from carriers, in total?' they will learn what kind of incentives are driving broker and adviser underlying decisions." (PLANSPONSOR)
Federal Judge Approves $4.7M Settlement of 10-Year ERISA Lawsuit Against SunTrust Banks
"[P]lan participants will each receive a share of the payment from the settlement fund ... Named plaintiffs each receive a case contribution award of $10,000. Class counsel were awarded attorney fees in the amount of $1,583,333.33 and reimbursement of expenses totaling $462,810.18[.]" [In Re SunTrust Banks, Inc. ERISA Litigation, No. 8-3384 (N.D. Ga. June 28, 2018)] (Atlanta Business Chronicle)
Plan Committee Lessons from the Second Continental Congress
"Inertia is a powerful force.... Selection of committee members is crucial.... Know that there are risks.... It's important to put it in writing.... Actions can speak louder than words." (National Association of Plan Advisors [NAPA])
Top Fiduciary Questions to Ask Your Plan's Financial Professional
"How do I protect myself from being sued due to my position as a fiduciary on the 401k? ... What is a fiduciary, and how do you know if your advisor will fulfill that role? ... How does automated investing fit in with the traditional advisory model? ... . Who does our investment professional represent? ... What is this product's true track record over the long run? ... What exactly is a financial 'conflict of interest'? ... How do you get paid?" (Fiduciary News)
Matrix Trust Company Accused of Making Unauthorized Transfers of 403(b) Plan Assets
"Matrix [allegedly] ... did not verify that the transfers were authorized by the participants in the 403(b) plans or permissible under the terms of the plans. [Plaintiffs allege that] the plans for which Matrix was custodian could only be invested in certain mutual funds as specified by the 403(b) plans' documents, [and that] the bank account maintained by Vantage or its agents was not one of them." (planadviser)
When It Comes to the Proposed SEC Advice Rule, Words Matter
"Regulation Best Interest would establish a new conduct standard for broker-dealers that provide investment recommendations to retail customers.... To differentiate the existing standard for RIAs from the new one for brokers, the SEC proposes to reinterpret 'best interest' in non-fiduciary terms for broker-dealers. The words 'fiduciary' and 'loyalty,' which have long been part of the lexicon associated with 'best interest,' are nowhere to be found in the enhanced suitability standard now under consideration." (InvestmentNews)
Three Reasons Cryptocurrency Is Making Its Way Into Retirement Plans
"[C]ryptocurrencies represent one of the newest, fastest growing and most intriguing asset classes around. But do they belong in a retirement account? ... [R]easons some are starting to create a cryptocurrency IRA as part of their overall retirement portfolio: [1] Diversification ... [2] Government Hedge ... [3] Long-Term Growth Potential." (Forbes)
Questions (with Answers) about Benefit Plan Best Practices
"What does 'best practices' mean? ... What activities do best practices embrace? ... Are the steps needed to perform the fiduciary disciplines defined? ... Isn't our plan's recordkeeper obligated to enforce best practices? ... I know that managing our plan's fees is a required practice, but how do I know if our vendors' fees are fair and reasonable?" (Roland|Criss)
Is Arbitration the Future for ERISA Claims?
"Absent further legislation by Congress amending the Federal Arbitration Act or state legislation permitting private attorney general actions such as California's Private Attorneys General Act, the enforceability of mandatory arbitration programs with class waivers can be assured. Employers and plan sponsors who do not have such arbitration programs need to be aware of this significant development and at least consider whether an arbitration program with a class waiver is appropriate for them" (Seyfarth Shaw, via Lexology)
Finally Final: Court's Mandate Terminates DOL Fiduciary Rule
"The DOL has remained silent following the Fifth Circuit's June 21, 2018, mandate officially invalidating the investment fiduciary guidance.... [T]he SEC has indicated that [its] final guidance will generally include advice given to retirement savers who are invested in securities and are receiving investment advice from broker-dealers or registered investment advisors." (Ascensus)
[Opinion] Merrill Lynch Took the Lead on the DOL Rule, Now It's Wrapping Its Flip-Flop in the Same Pious Intent
"When it looked like the DOL fiduciary rule was a foregone conclusion two years ago, Merrill Lynch jumped ahead of pack and announced the end of commission-based IRAs with a major advertising campaign exalting its holier-than-thou embrace of the controversial regulation.... When the rule finally died in the federal 5th Circuit Court of Appeals earlier this month, Merrill's reaction was swift.... [It] announced it would be re-examining its position over the next 60 days -- in the name of providing more 'choice.' " (Lisa Shidler, in RIABiz)
Xerox HR Solutions Wins Another Dismissal in ERISA Challenge
"In the original complaint, [Xerox HR Solutions] was accused of collecting excessive fees and engaging in a type of pay-to-play arrangement with Financial Engines Inc.... The text of the new decision says the amended complaint has failed because 'it is an attempt to replead dismissed counts,' and because it includes an entirely new cause of action, violation of the Racketeer Influence Corrupt Organizations Act [RICO]. Also problematic, it includes new parties, Xerox Corporation and Conduent, Inc." [Chendes v. Xerox HR Solutions, LLC, No. 16-13980 (E.D. Mich. June 25, 2018)] (PLANSPONSOR)
GWU Tells Court 403(b)s Cannot Be Compared to 401(k)s
"In a brief supporting a motion to dismiss a case against George Washington University related to the management of its 403(b) plan, the defendants note that 403(b)s have always looked differently and were set up for a different purpose than 401(k) plans." (PLANSPONSOR)
Supreme Court Declines to Hear Challenge to Time Limits on Fiduciary Breach Waivers
"he Supreme Court on [June 25] declined to hear a challenge by an ESOP plan trustee on whether a time limit for bringing breach of fiduciary duty claims can be waived. The [DOL] had argued for the petition to be denied[.]" (Pensions & Investments)
New Plaintiffs' Firms Bring Increased ERISA Litigation Risks for Employers (PDF)
"Until recently, a small group of specialized plaintiffs' firms has dominated the ERISA class action space, beginning with untested theories of liability that are eventually leveraged into portfolios of lawsuits. Those portfolios (and the plaintiffs' attorneys who created them) have become well-known. But an interesting trend has emerged in the day-to-day ERISA litigation docket: new plaintiffs' firms have begun to enter the space in a significant way. This development, which has significant implications for plan sponsors and fiduciaries, has been picking up significant speed in the last several months." (Jenner & Block, via Employee Relations Law Journal)
The End of the DOL's Fiduciary Rule
"It remains to be seen whether some firms will nonetheless continue the processes or standards they have already put in place in response to the fiduciary rule. For instance, firms that suspended investment by IRAs and ERISA clients because they were unable to meet the BIC exemption under the fiduciary rule may decide to keep the suspensions in place. However, it also remains to be seen whether firms adopting and retaining the standards under the fiduciary rule will have a competitive advantage in the market." (Bradley)
Plans Easing Burdens by Taking the OCIO Route
"OCIO managers reported nearly 2,000 U.S. DC clients as of March 31, a 22.4% increase from 2017. Total assets for the group reached $113.8 billion as of March 31[.]" (Pensions & Investments)
[Guidance Overview] Interesting Angles on the DOL's Fiduciary Rule, Part 96
"[According to] the SEC proposal ... a 'retail customer' includes individual investors, family and personal trusts, IRA owners, and plan participants. However, it does not include businesses, retirement plans, and tax-exempt organizations. Unfortunately, the SEC did not explain why they excluded some of those investors, who may be relatively unsophisticated." (FredReish.com)
Indexed Annuity Issuers Seek 401(k) Plan Default Investment Role
"QDIA regulations prevent employers from using many kinds of annuities, including indexed annuities, as QDIAs in 401(k) plans and other retirement plans governed by ERISA ... Indexed annuities protect holders against market downturns and but offer the holders a chance to share in investment market growth... [M]any experts believe that the typical indeed annuity would not qualify as a QDIA ... [R]egulators could add consumer protection requirements to make an indexed annuity suitable as a QDIA, such as new disclosure and surrender charge requirements." (ThinkAdvisor)
Fifth Circuit Issues Mandate Vacating the DOL Fiduciary Rule (PDF)
"Asset managers who revised subscription documents, placement agent agreements, marketing materials and other documents to take advantage of the Fiduciary Rule's 'Independent Fiduciary Exception' may begin removing that language from those documents ... Asset managers who suspended investment by IRAs and other ERISA clients that were unable to meet the requirements of the Independent Fiduciary Exception may now admit those investors to applicable products, to the extent any such investors would have been admitted prior to June 9, 2017." (Fried Frank)
It's Over! Fifth Circuit Issues Mandate Vacating Fiduciary Rule
"What this means is that the 'Five Part Test' from 1975 has sprung back to life, and Advisory Opinion 2005-23A (the 'Deseret Opinion') has likely been restored.... The SEC has proposed a slate of rules that would cover the retirement space. The retirement industry has a role to play first in ensuring that any new regulations are workable and second in seeking coordination between the SEC and DOL. Separately, financial institutions that achieved BIC Exemption compliance may seek new exemptions that provide broad relief for advice fiduciaries." (Groom Law Group)
It's Official: The Fiduciary Rule Is Dead
"[T]he final judgment ... not only spoke to the disposition of the case ... but also contained an order that the DOL 'pay to appellants the costs on appeal to be taxed by the Clerk of this Court.' Most of the document was a copy of the March 15 decision." [Chamber of Commerce v. DOL, Nos. 16-1476, 16-1530 and 16-1537 (5th Cir., mandate issued Jun 21, 2018)] (American Society of Pension Professionals & Actuaries [ASPPA])
The ESOP Fiduciary's Responsibility for Determining Stock Value
28 PowerPoint slides. "[ERISA] generally requires relying upon the work of an independent appraisal expert. If a fiduciary relies on an inadequate appraisal, that fiduciary can breach its duties and/or violate ERISA's prohibited transaction rules." (McDermott Will & Emery)
The High Stakes of QDIA Selection
"For plan sponsors, the tremendous growth in assets, changing market conditions and balancing the needs of younger and older participants complicates selection and monitoring of these investments. Advisors can help by bringing plan demographics to the discussion and looking at the distribution of ages and account balances of a plan population." (American Century Investments)
Socially Responsible Investing: What Plan Sponsors Need to Know
"While investing in companies that are socially and environmentally conscious is not a consideration for all active and passive investment strategies, for those retirement plan sponsors that try to match the moral and ethical expectations of their plan participants, the way in which they approach ESG-focused investment strategies can be a point of confusion." (Cammack Retirement Group)
[Guidance Overview] Interesting Angles on the DOL's Fiduciary Rule, Part 95
"[It] does not appear that the best interest standard would apply to recommendations to plans that are not participant directed. For example, a recommendation to take a distribution from a defined benefit pension plan or a cash balance pension plan does not seem to be a securities recommendation, because the participant does not have the ability to liquidate plan investments. On the other hand, a recommendation by an RIA to take a distribution from any type of plan would be covered by the best interest standard. Similarly, for RIAs a recommendation about the investments in the rollover IRA would also be covered by the best interest standard." (FredReish.com)
Fourth Circuit Finds Insurer Not Liable for Employer's Mistake
"The Fourth Circuit found in favor of an insurer on a claim for life insurance benefits, finding the insured's failure to submit the required evidence of insurability was not excused by his employer having wrongly deducted premiums for that coverage from his pay.... [T]he court found the employer, and not LINA, was tasked with day-to-day administration of the plan ... LINA was not responsible for notifying the decedent of the EOI requirement, and therefore could not be liable for a breach of that duty." [Gordon v. CIGNA Corp., No. 17-1188 (4th Cir. May 15, 2018)] (Seyfarth Shaw LLP)
Defending Against Class Actions: Four Strategies for ERISA Litigation
"A defense strategy focused on dismissing the lawsuit or narrowing the class at the earliest opportunity will help to reduce the pain. Raising some of the following arguments in a motion to dismiss or in opposition to a motion for class certification may advance that strategy.... [1] Standing ... [2] Statute of Limitations ... [3] Exhaustion ... [4] Rule 23(b)(3)." (Faegre Baker Daniels)
Recent DOL Settlement Agreements with ESOP Trustees
"When viewed in its entirety, the [GreatBanc Trust Company (GBTC)] Agreement emerges as the most relevant guidance for ESOP trustees by laying the groundwork for subsequent settlement agreements. While there are differences and departures, subsequent agreements ... largely follow the principles laid out in the GBTC Agreement.... [T]he most recent settlement reached in May of 2018, is notable in that it is identical to the GBTC Agreement." (The Wagner Law Group)
The Importance of Educating Investment Committees
"Among key subjects to incorporate in education and training are developing the investment policy statement (IPS), the retirement industry as a whole and prudent fund lineups. An IPS ... is critical when understanding the role investment advisers, and managers, take on." (PLANSPONSOR)
Anthem 401(k) Investor Ordered to Disclose Facebook Messages
"A participant in Anthem's 401(k) plan must disclose to the company's attorneys some of her Facebook private messages concerning her lawsuit accusing Anthem of allowing excessive fees in the plan. The Facebook private messages ... discussed the participant's emotional status over her upcoming deposition, a future meeting with the attorneys, and that she wanted to be a 'good representative'[.]" [Bell v. Pension Comm. of ATH Holding Co., No. 15-2062 (S.D. Ind., order on motion to compel, June 14, 2018)] (Bloomberg BNA)
Non-ERISA 403(b) Plans May Be Subject to Proposed SEC Regulation Best Interest
"[T]he proposed [SEC] regulation could apply to a non-ERISA plan, such as a non-ERISA 403(b) plan.... [T]he employee owning the annuity contract would likely be treated as a 'retail customer' and subject to the protections of the Best Interest rules. To that end, although they are treated differently for tax purposes, the participant in the non-ERISA 403(b) plan would seem to be in the analogous position to the owner of an IRA." (The Wagner Law Group)
Insurer's Payment of Reduced Benefit Not a Fiduciary Breach
"[An] insurance company did not breach its fiduciary duty under ERISA when it paid an insured's widow only half of the amount of life insurance coverage for which the decedent had paid premiums.... [T]he Fourth Circuit held that the insurer had no fiduciary duty to notify the insured that he had not satisfied the evidence of insurability requirement needed for supplemental benefits beyond the guaranteed amount because that task was solely the responsibility of the employer." [Gordon v. CIGNA Corp., No. 17-1188 (4th Cir. May 15, 2018)] (The Wagner Law Group)
[Guidance Overview] Why Fiduciary Status Still Matters in a Post-Fiduciary Rule World: Broker-Dealer Compensation and Prohibited Transactions
"The Fifth Circuit's ruling will vacate the Rule in toto, which means that all of the new prohibited transaction exemptions disappear as well ... Many [broker-dealers] will still be fiduciaries under the 1975 Rule, but the variable or third-party compensation they received while relying on the BIC Exemption will no longer be permitted. Even though they were fully complying with the DOL Fiduciary Rule and the BIC Exemption, there may not be another exemption they can use once the 5th Circuit decision goes into effect." (Drinker Biddle)
About That SEC Best Interest Rule
"Regulation Best Interest makes clear that it would apply only to stand-alone broker/dealers, which currently account for about 30% of all broker/dealers. The other 70% of broker/dealers are dually registered; that is, they are RIAs, as well. This larger group wouldn't be subject to Regulation Best Interest at all." (W. Scott Simon, in Morningstar Advisor)
It's Official: DOL Fiduciary Rule Is Dead
"[On June 13], the last deadline for resuscitating the fiduciary rule passed when the government declined to ask the U.S. Supreme court to reconsider the appeals court's decision. The prospect of holding advisers accountable to retirement savers hasn't disappeared entirely, though. The [SEC] is considering its own version of the fiduciary rule, known as the best-interest rule." (Bloomberg)
Minimizing Fiduciary Liability Exposure for 401(k) Plan Sponsors
"The incremental fees for an actively managed mutual fund relative to its incremental returns should always be compared to the fees of a comparable index fund relative to its returns. When you do this, you'll quickly see that the incremental fees for active management are really, really high -- on average, over 100% of incremental returns." (The Prudent Investment Fiduciary Rules)
SEC Best-Interest Proposal Doesn't Affect 401(k) Brokers
"While the SEC has proposed to impose a limited, or transaction-based, best-interest standard on broker-dealers, that only applies to investment recommendations made to 'retail customers.' Based on the SEC's definitions, it does not appear that, ... retirement plans are retail customers. As a result, broker-dealer investment recommendations to retirement plans would not be covered by the best-interest standard." (InvestmentNews)
Northwestern University Defeats 403(b) Lawsuit
"[P]laintiffs alleged that Northwestern University and its fiduciaries ... mandated the inclusion of particular stock accounts in the plans, impos[ed] excessive record-keeping fees, improperly allowed payment for record-keeping expenses through revenue sharing, and included too many investment options. The Court rejected all of plaintiffs' fiduciary duty claims." [Divane v. Northwestern Univ., No. 16-8157 (N.D. Ill. May 25, 2018)] (McDermott Will & Emery)
Target Date Fund Benchmarks: Availability and the Selection Process (PDF)
14 pages. "[F]iduciaries must monitor and evaluate their TDF selection. This article describes the benchmarks that are currently available and offers some guidance on selecting the appropriate benchmark. Fiduciaries should align the objectives of their TDF with those of the benchmark, and confirm that the benchmark glide path and underlying allocations are in line with the TDF that is being evaluated." (Target Date Solutions)
 
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