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Fiduciary duties of trustees, directors, others

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USC Can't Force Retirement Plan Fee Claims Into Arbitration
"The participants' ability to bring claims of fiduciary breach under [ERISA] is unaffected by their arbitration agreements with USC because those claims are, by their nature, plan claims and the plan didn't consent to arbitrate, Judge Virginia A. Phillips of the U.S. District Court for the Central District of California held March 23." [Munro v. Univ. of So. Calif., No. 16-6191 (C.D. Cal. Mar. 23, 2017)] (Bloomberg BNA)
Anthem Workers Advance Challenge to 401(k) Plan Fees
"The proposed class action accuses the committee of including high-fee mutual fund share classes in Anthem's 401(k) plan and paying excessive record-keeping fees to Vanguard Group Inc. A federal judge largely denied the committee's motion to dismiss on March 23, saying that choosing high-fee share classes when identical lower-fee classes were available could constitute fiduciary breach under [ERISA]." [Bell v. Pension Comm. of ATH Holding Co., No. 15-2062 (S.D. Ind. Mar. 23, 2017)] (Bloomberg BNA)
How Much Does a Mutual Fund Company Have to Disclose Under BICE for Funds Governed by ERISA?
"The Introduction of this article gives a detailed look at what the new rules are and how they have changed from the 1975 regulations. Part 1 discusses the possible areas where conflict will be found in disclosures. Part 2 gives a detailed analysis of 15 mutual fund disclosures from various financial advisors.... [The author] assessed whether the disclosures would be materially misleading under the best interest of the client analysis." (Rodgrick Hickman, Student at the University of Mississippi School of Law, via SSRN)
Merrill Lynch and Morgan Stanley: A Tale of Two Fiduciary 401(k) Business Models
"While Merrill Lynch is offering advisers servicing 401(k) plans a fairly high level of discretion, Morgan Stanley is substituting some adviser discretion for more risk at the firm level ... The firms, each with adviser forces of greater than 14,000, are the first among their wirehouse peers to outline changes to how their representatives can conduct fiduciary 401(k) business as the [DOL's] fiduciary rule looms." (Pensions & Investments)
DOL Fiduciary Rule Status Update
"The [DOL] received 900 comment letters, along with several petitions, in respect of its proposed 60-day delay of the fiduciary rule. As expected, there was a split in support/opposition of the proposed delay.... The DOL is confident it will be able to make a final decision on whether to delay the rule before the April 10 applicability date.... April 17 is the deadline to submit comment letters addressing both the questions raised in the President's Memorandum, as well as the litany of questions posed by the DOL in its proposed delay." (Stradley Ronon)
Sparks Fly as DOL Nominee, Sen. Warren Spar Over Fiduciary Rule's Fate
"President Trump's nominee to head the [DOL] is pledging a thorough review of the fiduciary rule that could lead to a repeal or revision of the controversial regulation. At his confirmation hearing on [March 22], Alexander Acosta sparred with Senator Elizabeth Warren (D-Mass.) over the rule's fate, but insisted that, if confirmed, he would abide by Trump's directive that explicitly calls for a review of the fiduciary regulation." (Financial Planning)
Managing Risk While Investing for Governmental Retirement Plans
"[T]here is lasting confusion arising from the fact that these big state-run plans are not subject to [ERISA]... 'But this cannot be taken as these plans having free reign to invest however they please,' [George Michael Gerstein, of Stradley Ronon Stevens & Young] warns. 'They are all subject to state law -- and these state laws vary tremendously. Some are very strict and lay out very specific requirements as to how state money can be allocated.... Many have at least some restrictions on certain vehicles or transactions.' " (planadviser)
Interesting Angles on the DOL's Fiduciary Rule, Part 41
"[T]he delay of the new fiduciary rule does not mean that we are 'rule-less.' Instead, the 'old' rule, and exemptions, which have been place for decades, will continue to apply. Does that mean that we are back in the 'good old days' where we won't need to pay attention to the application of the fiduciary rule to IRAs? ... Over the past few years, a tremendous amount of attention has been paid to the meaning and consequences of being a fiduciary ... And, with this newfound attention, it is possible that many common practices will, when closely examined, result in fiduciary status under the old rule." (
[Guidance Overview] DOL Edges Toward Delay on Expanded Fiduciary/Conflict of Interest Rules
"[W]hile [FAB 2017-01] signals the DOL's enforcement intentions, it does not give financial institutions much additional time to comply, and compliance often requires material changes in business practices. The enforcement reprieve is the statement of only one stakeholder in these changes, so does not provide absolute protection to financial institutions from failure to comply with the Fiduciary Rule beginning on April 10, 2017, absent an official delay being issued before that date." (Frost Brown Todd LLC)
Disgorgement Claims Continue to Confound Courts in ERISA Class Actions
"Courts continue to be split over the availability of disgorgement and 'accounting for profits' in ERISA class actions involving in-house investment plans.... [In] some of these cases, the reason for the dismissal appears to turn on fiduciary status.... As [one] court explained, accounting and disgorgement claims are claims for equitable relief, but claims seeking these remedies against non-fiduciary parties are generally considered legal (i.e., not equitable) claims. As a result, the court required tracing." (Jackson Lewis P.C.)
Text of District Court Opinion Denying Request for Emergency Injunction Delaying DOL Fiduciary Rule (PDF)
"Compliance costs already incurred cannot constitute the irreparable harm Plaintiffs must show because the standard is inherently prospective. Plaintiffs do not argue that additional compliance costs between now and the applicability date would be substantial or prohibitively expensive." [U.S. Chamber of Commerce v. DOL, No. 16-1476 (N.D. Tex. Mar. 20, 2017)] (U.S. District Court for the Northern District of Texas)
Bank of America Prevails in 401(k) Asset Transfer Case
"Bank of America Corp. prevailed against employees who challenged a $3 billion transfer from the company's 401(k) plan to its cash balance defined benefit plan ... The employees failed to establish that BofA retained any profit as a result of the transfer, Judge Graham C. Mullen [held]." [Pender v. Bank of America Corp., No. 5-238 (W.D.N.C. Mar. 17, 2017)] (Bloomberg BNA)
Tax Reform Could Be 'Way Worse' for Retirement Industry Than DOL Fiduciary Rule
"Some of the items that could be on the table are a freezing or reduction of 401(k) contribution limits, a sort of double taxation on the retirement savings of individuals in higher tax brackets, and elimination of 403(b) and 457 plans, [said Brian Graff, Executive Director of the National Association of Plan Advisors] ... Mr. Graff also said the fiduciary rule ... poses a large risk in its current iteration to brokerage and advisory firms because of its provision allowing a private right of action for investors. This exposure to class-action litigation ... [is] 'a game-changer from a business standpoint.' " (InvestmentNews)
Using an All-Index-Fund Lineup in 401(k) Plans
"Arguments for using only index funds: Less volatility ... Elimination of advisor conflicts ... No more poorly performing funds ... Simplicity ... The end of fund changes ... Better performance ... Closet indexers ... Higher level of fiduciary compliance? ... Arguments for using actively managed funds: Less than 100% of every market downturn ... Inefficiencies still exist ... Misperception of active management ... Animal spirits." (Lawton Retirement Plan Consultants)
Eighth Circuit Affirms Fiduciary Breach for Disloyalty and Rejects District Court Finding of No Loss
"While the appellate court affirmed the district court's ruling that the ABB fiduciaries acted disloyally when they decided to replace the Vanguard Wellington Fund with the Fidelity Freedom Funds, the Eighth Circuit directed the lower court to reconsider the appropriate measure of damages.... While a prudent process is critical and fiduciaries may enjoy deferential treatment of their investment decisions, those protections may only go as far as a challenge to the fiduciary's prudence. Where the fiduciary's loyalty is at issue, there is 'no place for deference.' " [Tussey v. ABB, Inc., No. 15-2792 (8th Cir. Mar. 9, 2017)] (Miller & Chevalier)
House Democrats Denounce DOL Rule Delay as Comment Period Closes
"[A] letter from 40 House Democrats [to the DOL] said that the Trump administration DOL was trying to undo in a matter of weeks a measure that had been carefully constructed over the course of more than six years by the preceding Obama administration. The lawmakers also characterized the stated reason for the delay -- to give the agency time to reassess the rule's impact and consider modifying or repealing it -- as 'specious' since the Obama DOL already vetted it." (InvestmentNews)
Managing Critical 403(b) Issues Through Proper Allocation of 3(16) and 3(21) Fiduciary Responsibility
"[T]he complex nature of handling 403(b) plans -- and, in particular, the unique manner in which the fiduciary rules apply to them -- make these plans uniquely suited to customized fiduciary services.... Allocated fiduciary services are especially critical in the growing movement toward 403(b) MEPs, both of the ERISA and non-ERISA types. It takes a special expertise to manage the 'legacy' contract issues in a coordinated and meaningful way [among] a significant number of employers between which employees can often transfer." (Business of Benefits)
[Opinion] Economic Policy Institute Comment Letter to DOL Opposing Proposal to Extend the Applicability Date of the Fiduciary Rule
"[EPI is] writing to express our strong support for the scheduled April 10, 2017, applicability date of the [DOL's] fiduciary rule.... [R]etirement savers and other investors would be harmed by the delay, while the financial industry would benefit.... [T]he costs to savers of a delay far outweigh any benefits to the financial industry." (Economic Policy Institute [EPI])
[Opinion] ICI Comment Letter to DOL in Support of Proposed Delay of Fiduciary Rule (PDF)
25 pages. "[A]ny potential 'lost benefits' associated with the delay -- including the Department's highly speculative foregone gains to affected retirement investors -- are well justified by the avoidance of disruption to those investors that would be caused if the rule is not delayed." (Investment Company Institute [ICI])
Fiduciary Rule Friends and Foes Weigh in on Proposed Delay
"The [DOL]'s proposed 60-day delay of the fiduciary rule's implementation garnered 565 comments from people pushing for and against the delay.... Once those comments are reviewed, the DOL will submit a final delay rule to the Office of Management and Budget." (Pensions & Investments)
[Opinion] ERIC Comment Letter to DOL Supporting Extension of Applicability Date of Fiduciary Rule (PDF)
"Not only is the plan sponsor harmed by the uncertainty on the state of the rule, but also the participants who may see a sudden decrease in important services if the plan sponsor is not provided adequate time to replace those services.... [ERIC] strongly encourage[s] the DOL to provide a new implementation date that allows for adequate time for service providers to notify plan sponsors of changes in services as well as adequate time for plan sponsors to implement any changes in retirement plan services." (The ERISA Industry Committee [ERIC])
[Opinion] SPARK Institute Comment Letter to DOL Supporting Proposed Delay of Fiduciary Rule (PDF)
"[The SPARK Institute believes] that a delay is warranted ... [In] order to allow the Department to conduct a thorough review of the Investment Advice Regulation and to prevent potentially duplicative and unnecessary implementation costs, which will adversely affect plan participants, we encourage the Department to adopt a delay of longer than 60 days." (The SPARK Institute)
General Cable Foreign Bribery Deal Spawns ERISA Class Action
"The proposed class action claims that General Cable stock was artificially inflated for more than 13 years because of an undisclosed bribery scheme aimed at gaining business in violation of the Foreign Corrupt Practices Act. In 2016, General Cable agreed to pay more than $75 million in penalties to resolve investigations into the bribery scheme by the Department of Justice and the [SEC]. The new lawsuit seeks to hold General Cable and certain executives liable under [ERISA] for drops in the company's stock price that allegedly caused losses in employees' retirement accounts." (Bloomberg BNA)
An Overview of Recent Litigation with Respect to In-House Funds
"There have been a number of recent lawsuits brought against financial services companies alleging prohibited ERISA 'self-dealing' with respect to the use of proprietary funds and services for plans they maintain for their own employees.... [T]hese cases also typically involve allegations of breaches of ERISA's loyalty and prudence standards ... [This article reviews] the issues presented by these cases for plan fiduciaries -- both fiduciaries of financial services company in-house plans and 'regular' plan fiduciaries." (October Three Consulting)
[Guidance Overview] DOL Issues Temporary Enforcement Relief for Fiduciary Rule Non-Compliance
"[FAB 2017-01] provides no protection or assurances against action by other regulators or the private sector. Unless the DOL issues a class exemption providing relief for prohibited transactions occurring during a 'gap period' (or a 'reasonable period' after the decision not to delay the Rule is published, if this should occur), the enforcement policy alone won't provide relief for 'conflicted' advice to IRAs or for excise taxes resulting from prohibited transactions involving ERISA plans. The DOL has no jurisdiction over the enforcement of the prohibited transaction rules for IRAs, or the assessment of excise taxes, which is handled by the IRS in all cases." (Drinker Biddle)
[Guidance Overview] DOL Issues Temporary Enforcement Policy Regarding the Fiduciary Rule (PDF)
"Although [FAB 2017-01] provides for a delay in enforcement in the event of an April 10 Applicability Date, the guidance only applies to DOL enforcement action. The FAB does not provide relief from the prohibited transaction rules generally applicable to both ERISA plans and IRAs, and thus, it offers no protection against the imposition of excise taxes by the IRS. It is important that plan sponsors and advisors ... review the contractual terms of any recently negotiated changes to service agreements to comply with the Fiduciary Rule. These agreements may contractually hold advisors to new fiduciary standards as of an April 10 Applicability Date." (Trucker Huss)
Four Questions to Guide Your Fee Evaluation Process (PDF)
"[1] Who is receiving compensation from your plan? ... [2] What are the fees and expenses associated with your plan? ... [3] How do your fees and expenses compare to other service providers or investment options? ... [4] Why is the compensation warranted?" (TIAA)
[Opinion] American Retirement Association Comment Letter to DOL on Proposed Delay of Fiduciary Rule (PDF)
"ARA recommends that the applicability date be delayed until January 1, 2018, and that transitional relief with regard to the Best Interest Contract Exemption [BICE] be extended until July 1, 2018. ARA further recommends that the Department take such actions as are necessary to ensure that the effective date of the delay precedes the existing applicability date to avoid the unnecessary expense and disruption that would be caused by uncertain and shifting compliance standards." (American Retirement Association [ARA])
Merrill Lynch Outlines Plans for Its 401(k) Fiduciary Platform
"Merrill Lynch Wealth Management outlined plans [on March 15] to transition its defined contribution plan business over to a fiduciary model, coming several months after the firm announced similar plans for its retail retirement business and as the implementation deadline for the [DOL's] fiduciary rule approaches.... The announcement also follows on Merrill's decision to disallow use of commissions in the vast majority of advised IRAs in response to the fiduciary regulation." (InvestmentNews)
[Opinion] Retirement Advisor Council Comment Letter to EBSA on Proposed Delay of Fiduciary Rule (PDF)
"We believe a 60-day delay is inadequate and we request [EBSA] consider delaying implementation by 266 days to the first business day following January 1, 2018. We also request that the Department consider extending the period for providing comments to August 8, 2017." (Retirement Advisor Council)
Put It in Writing! Why Your Pension or 401(k) Plan Should Have Written Policies
"Plan fiduciaries sometimes think that they have total flexibility to deal with issues if they don't commit their processes to writing, but ... when fiduciaries act without policies that set out good fiduciary processes, they may be missing important issues, such as benchmarking fees regularly, or monitoring the limits on plan loans. Just putting a policy together forces you to focus on how you will do what needs to be done.... Here are some of the policies that are becoming more common and the reasons to consider them[.]" (Cohen & Buckmann, P.C.)
[Guidance Overview] Interesting Angles on the DOL's Fiduciary Rule, Part 40
"With all the attention that has been devoted to fiduciary status and prohibited transactions, it is possible, perhaps even probable, that the old rule will be applied more vigorously. As a result, advisers need to understand its provisions and need to review their practices to determine whether they are currently acting as fiduciaries under the old rule." (
[Opinion] SIFMA Comment Letter to EBSA on Proposed Delay of Fiduciary Rule
"Our members have spent hundreds of millions of dollars getting ready to comply with the Rule, and a group of our largest members alone estimate that they would need to spend an additional $300 million to be ready for the April 2017 compliance deadline. If the entire industry is in roughly the same position, more than a billion dollars must still be spent to be ready for the April applicability date. Further, members need to plan for the January 2018 compliance date. Without a corresponding extension of the transition period, members will continue to expend substantial resources." (Securities Industry and Financial Markets Association [SIFMA])
ERISA Stock Drop Challenge Targets Allergan
"The complaint suggests defendants 'permitted the plans to continue to offer Allergan Stock as an investment option to participants even after the defendants knew or should have known that Allergan Stock was artificially inflated during the class period,' which runs February 25, 2014, to November 2, 2016." (PLANSPONSOR)
Texas Judge Asks Plaintiffs to Explain Need for DOL Rule Injunction
"A Texas judge asked plaintiffs today to explain why an emergency injunction is needed given the [DOL's] willingness to defer enforcement.... Plaintiffs asked for the emergency injunction Friday to delay the April 10 'applicability date' of the DOL fiduciary rule. That same day, the DOL released a bulletin alerting the financial services industry that it will not pursue enforcement of the rule in the short term." (
Emergency Request to Block DOL Fiduciary Rule Filed in Texas Court
"The U.S. Chamber of Commerce and industry groups suing the Labor Department over its fiduciary rule in a Texas court filed an emergency request Friday asking a judge to stop the rule from taking effect while they take their case to the U.S. Court of Appeals for the Fifth Circuit.... The Chamber and SIFMA appeal came the same day that [the DOL] issued a temporary enforcement policy regarding its fiduciary rule." (ThinkAdvisor)
[Guidance Overview] Fiduciary Rules and 401(k) Hardship Distributions: The Latest
"An interesting byproduct of the regulatory process over the past several years is that both advisors and plan-related clients have been sensitized to many of the issues addressed -- albeit sometimes clumsily -- in the fiduciary regulation. For example, should a plan require that its investment advisor act as a fiduciary, even if the regulation ends up not requiring this? If not, why would a plan want to retain someone who is not required to act in the plan's best interest?" (Ferenczy Benefits Law Center LLP)
Eight Circuit Remands Tussey v. ABB, Inc. for Second Time, Instructs District Court to Evaluate Methods of Measuring Plan Losses Caused by Fiduciary Breach
"[T]he Eighth Circuit had proposed an alternative method of calculating losses ... but on remand the district court erroneously considered itself bound by that proposal. The Eight Circuit in the second appeal stated that the district court was not bound to follow that proposal but instead was required to: [1] Evaluate several different possible methods for measuring losses before choosing the proper method. [2] Consider the plan participants' contentions about why, in their view, the Eighth Circuit's proposed method of valuing the plan participants' losses was not the correct method to apply." [Tussey v. ABB, Inc., No. 15-2792 (8th Cir. Mar. 9, 2017)] (Practical Law Company)
Five Things Every New CFO Should Know About the 401(k) Plan
"[1] Compliance: Understanding fiduciary responsibilities and liabilities ... [2] Investments: What are the options and are they low cost? ... [3] Overall plan costs: How much does your current plan cost and how much would your ideal plan cost? ... [4] Administrative work: Who is doing what for whom? ... [5] Employee experience: How well is the 401(k) serving the employees?" (ForUsAll)
The Takeaway from FAB 2017-01 Guidance on Fiduciary Rule Is 'Significant'
"It's significant given that the only enforcement mechanism that was supposed to be effective prior to Jan. 1, 2018 is DOL enforcement. Essentially, so long as the DOL isn't enforcing, there is no reason to comply." (RIABiz)
[Guidance Overview] DOL Issues Temporary Enforcement Guidance on Fiduciary Rule
"Although the enforcement policy provides regulatory relief to financial institutions and other service providers, it cannot completely alleviate concerns about the fiduciary rule's approaching applicability date because the fiduciary rule provides for private rights of action.... Accordingly, the DOL's enforcement policy does not insulate financial institutions and other retirement plan service providers from all potential liability if the fiduciary rule were to become applicable." (Kilpatrick Townsend)
The Misperception of Fiduciary Risk and Active Management in DC Plans: A Legal Perspective
"This white paper aims to help fiduciaries navigate the waters of plan investment selection and monitoring processes by: [1] Decoding the legal standards that apply to fiduciaries who are responsible for choosing investment options for their plans. [2] Identifying some guiding principles drawn from legal authorities that may assist fiduciaries assessing investment strategies such as active and passive as part of a plan lineup. [3] Emphasizing the importance of process as the most important factor in fiduciary decision-making." (T. Rowe Price)
[Opinion] DOL Fiduciary Rule Already Is Delivering Benefits to Workers and Retirees: Delay Puts Those Benefits at Risk (PDF)
"Just as intended, the rule is eliminating the most harmful conflicts associated with commission-based advice without eliminating access to commission-based advice.... Despite dire predictions to the contrary, most firms are continuing to offer commission-based retirement investment advice.... Far from driving up investors' costs, the rule is already responsible for significant cost reductions." (Consumer Federation of America)
[Guidance Overview] DOL Issues Field Assistance Bulletin with Fiduciary Rule Enforcement Relief (PDF)
"[FAB 2017-01] provides enforcement relief ... [1] where the DOL decides not to issue a delay of the Fiduciary Rule's Applicability Date; and [2] where the DOL delays the Applicability Date, but the delay is published after April 10, 2017.... [T]he enforcement relief provided in the FAB provides much needed certainty that no matter what the outcome of the Proposed Delay, firms will have adequate time to communicate with clients." (Groom Law Group)
[Guidance Overview] DOL Proposes to Delay Fiduciary Advice Rule, Requests Comments on Delay and on Costs, Benefits of the Rule
"In the Proposal, the DOL itself recognized the disruptions that could arise if there were 'two major changes in the regulatory environment rather than one.' Therefore, interested persons may wish to urge the DOL [1] to continue to delay the Rule's effective date until the review required by the Presidential Memorandum is completed; and [2] that any extensions of the delay be announced as soon as practical." (Katten Muchin Rosenman LLP)
[Official Guidance] Text of DOL Field Assistance Bulletin 2017-01: Temporary Enforcement Policy on Fiduciary Rule (PDF)
"In the event the Department issues a final rule after April 10 implementing a delay in the applicability date of the fiduciary duty rule and related PTEs, the Department will not initiate an enforcement action because an adviser or financial institution did not satisfy conditions of the rule or the PTEs during the 'gap' period in which the rule becomes applicable before a delay is implemented ...

"In the event the Department decides not to issue a delay in the fiduciary duty rule and related PTEs, the Department will not initiate an enforcement action because an adviser or financial institution, as of the April 10 applicability date of the rule, failed to satisfy conditions of the rule or the PTEs provided that the adviser or financial institution satisfies the applicable conditions of the rule or PTEs, including sending out required disclosures or other documents to retirement investors, within a reasonable period after the publication of a decision not to delay the April 10 applicability date. The Department will also treat the 30-day cure period under Section IX(d)(2)(vi) of the BIC Exemption and Section VII(d)(2)(v) of the Principal Transactions Exemption as available to financial institutions that, as of the April 10 applicability date, did not provide to retirement investors the disclosures or other documents described in Section IX(d)(2)(vi) of the BIC Exemption and Section VII(d)(2)(v) of the Principal Transactions Exemption." (Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL])

Eighth Circuit Opinion in Tussey v. ABB: District Court Misconstrued Earlier Ruling, Must Reconsider Participant Claims (PDF)
"In an earlier appeal, we directed the district court to 'reevaluate' how the participants might have been injured if the ABB fiduciaries breached their fiduciary duties under [ERISA] when they changed the investment options for the plans.... Because the district court apparently mistook that direction for a definitive ruling on how to measure plan losses, and as a result entered judgment in favor of the ABB fiduciaries despite finding they did breach their duties, we vacate the judgment on that claim and remand for further consideration regarding whether the participants can prove losses to the plans. Because we thus reopen one of the participants' substantive claims, we also vacate and remand the district court's award of attorney fees." [Tussey v. ABB, No. 15-2792 (8th Cir. Mar. 9, 2017)] (U.S. Court of Appeals for the Eighth Circuit)
Comments Flood DOL on Fiduciary Rule Delay
"As of the close of business [on March 8], the DOL posted 285 comments on a request to delay the rule's April 10 applicability date by 60 days.... Comments are split fairly evenly between both sides of the fiduciary fence. Financial services firms, trade organizations and individual letter writers repeat many of the arguments made by both sides. Comments are being accepted [by the DOL] until March 17." [Editor's note: the count stands at 345 as of noon on March 10.] (
[Guidance Overview] DOL Publishes Proposed Delay in Conflict of Interest Rule Applicability Date
"If the delay in applicability were not implemented, and the rule were ultimately rescinded, 'affected advisers, retirement investors and other stakeholders might face two major changes in the regulatory environment rather than one.' Thus, it is hard to see a justification for not delaying for some period. And it's clear -- with only 15 days to comment -- that DOL expects to adopt the extension relatively quickly.... A critical issue will be the extent to which the industry has already adapted to the new rule ... The delay (or, more significantly, the ultimate decision on review) may affect only part of the new rule[.]" (October Three Consulting)
TIAA Dodges Retirement Fee Lawsuit by University Workers
"Castel's decision puts an end to a proposed class action alleging that TIAA misused its dual position as record keeper and seller of group annuity contracts to take excessive compensation from retirement plan assets. Castel said TIAA's practice of refusing to share certain fees as a record-keeping offset with third-party providers wasn't an exercise of discretion that would make TIAA a fiduciary." [Malone v. Teachers Ins. & Annuity Ass'n of Am. (TIAA), No. 15-8038 (S.D.N.Y. Mar. 7, 2017)] (Bloomberg BNA)
Insperity Must Face Lawsuit Over 401(k) Fees, Funds
"The eight-count lawsuit attacks the management of Insperity's $2 billion 401(k) plan, which participants claim offered expensive and poorly performing investment options and paid excessive fees to a record keeper affiliated with the company. A federal judge on March 7 refused to dismiss most of the claims against Insperity and Reliance Trust Co., including the accusation that Insperity filled the 401(k) plan with untested target-date funds that earned fees for the company." (Bloomberg BNA)
Does the Fiduciary Exception Apply to Legal Advice Received By Insurers During the Claims Process?
"Adding to the body of conflicting authority on the scope of the attorney-client privilege in ERISA lawsuits, a district court has found that the fiduciary exception to attorney-client privilege applies to an insurance company that acts as a claim administrator, thus requiring disclosure of communications between the insurer and its lawyers regarding a claim for benefits during the claims process." [McFarlane v. First Unum Life Ins. Co., No. 16-7806 (S.D.N.Y. Feb. 6, 2017)] (Seyfarth Shaw LLP)
Fiduciary Fee Reasonableness
"There is no shortage of legal activity surrounding fee reasonableness. Fiduciaries can draw a variety of lessons from the alleged breaches, complaints filed, settlements, and court decisions. [This article provides] an overview of the most frequently litigated issues relating to fees, and the corresponding lessons that fiduciaries should learn." (Manning & Napier)
Schwab Employee 401(k) Lawsuit Uses Vanguard as Exhibit 'A'
"Schwab is just the latest in a line of quality firms being sued by their own employees ... for serving up allegedly subpar home cooking when it comes to pension care.... [S]imilar firms sued under similar circumstances tend to have to settle for big amounts.... What's certain is that this type of suit is especially toxic for a firm whose value proposition is tied so closely to trust." (RIABiz)
[Guidance Overview] BICE on Ice? Status of the DOL Fiduciary Rule (PDF)
"With recent developments in all three branches of government bearing on the authority and timing of the new [DOL] final rule expanding the definition of fiduciary 'investment advice' for purposes of [ERISA], the already formidable challenges for plan sponsors and retirement product and service providers have been made more difficult.... While DOL almost certainly had authority to adopt a 60-day delay without notice and comment rulemaking under the 'good cause' provisions of the Administrative Procedure Act, the process it has chosen ensures that all stakeholders will have an opportunity to be heard at each stage of its examination of the Final Rule." (Eversheds Sutherland)
[Guidance Overview] DOL Guidance on Shareholder Rights: A Political Ritual
"IB 2016-1 withdrew Interpretive Bulletin 2008-2, issued at the end of the Bush administration, and reinstated views expressed in Interpretive Bulletin 94-2, which was issued during the Clinton administration, but withdrawn by the Bush administration.... Obama-era guidance is consistent with Clinton-era guidance and can be viewed as consistent with Bush-era guidance, except as follows: [1] Obama-era guidance is based on the concept that ETI and ESG factors can positively impact the economic interests of the plan and its participants, and [2] Obama-era guidance supports shareholder activism/engagement if it is 'likely to enhance' shareholder value, while Bush-era guidance required that such activism/engagement be 'more likely than not' to enhance shareholder value." (Trucker Huss)
Understanding the Role of a Benefit Plan Committee (PDF)
12 pages. "[T]he plan committee -- that is generally responsible for operating the plan -- is the party whose actions are critical for minimizing potential exposure to fiduciary violations that could lead to DOL enforcement and/or private litigation." (The Wagner Law Group, for Legg Mason)
[Guidance Overview] DOL Proposes 60-Day Delay of Fiduciary Duty Rule
"[W]hat will happen next? One of four things seems likely: [1] The DOL will permit the Fiduciary Duty Rule, and associated exemptions, to become applicable on June 9, 2017, or perhaps a later date; [2] The DOL will begin the regulatory process to revoke the Fiduciary Duty Rule; [3] The DOL will begin the process to modify the Fiduciary Duty Rule; or [4] The DOL will decide it has not had enough time to fully consider the matter, and will seek a further extension, and continue work on one of the three outcomes described above." (Davis Wright Tremaine LLP)
[Guidance Overview] Interesting Angles on the DOL's Fiduciary Rule, Part 39
"Even though the DOL fiduciary rule is being delayed, other regulators have indicated their interests in protecting participants from inappropriate recommendations to take plan distributions and roll over to IRAs.... The regulators appear to be harmonizing around the type of analysis and investigation required to make a suitable or prudent recommendation." (
What Your 401(k) Investment Committee Should Focus On
"Investment option costs (and performance) ... Provider costs (and performance) ... Feature utilization and plan design ... Employee communications ... Investment committee fiduciary responsibilities ... Documentation of discussions and decisions." (Lawton Retirement Plan Consultants)

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