Notice of Class Action Settlement

A couple of our plan sponsors received notices that their plan is one of the settlement class members covered by some class action against a bank. The period covers some foreign transaction fees from 1997 to January 2019.

If they do nothing, it explains that a small percentage of the settlement may be sent to them, if the court approves.

Does this mean that years from now, the plan fiduciaries will receive some small check to allocate to participants to offset expenses paid by the plan from 1997 to January 2019? Would it be better to just write back asking to be excluded from the settlement? Or would that be a fiduciary breach?

Not knowing the amount makes it difficult to ascertain the right course of action.  I'm not saying the amount is "relevant" in the context of a fiduciary obligation to collect the amount - but if the amount is insignificant to the point that the costs of collecting it and allocating it exceed the amount, then I would think that it wouldn't be "prudent" to do so.  I'd collect it - and then depending on the amount, determine the best course of action.  The DOL has published some guidance on allocations of this type - and if you search, they may prove instructive.  Bottom line - whatever is received should NOT inure to the benefit of the plan sponsor.

Some other discussions on this kind of topic.

By the way - three of our clients received these and sent them into my team to deal with....  Should have kept my mouth shut.  Karma.  It's a bi!ch...

By any chance are you referring to the case named Carver et al. v. Bank of New York Mellon et al.?  It looks like millions of these postcard notices were mailed to plans with no rhyme or reason.  I've seen postcards addressed to fully insured welfare benefit plans! 

19 hours ago, MoJo said:

By the way - three of our clients received these and sent them into my team to deal with....  Should have kept my mouth shut.  Karma.  It's a bi!ch...

I just got one for our plan.  Can I send it to you to deal with? ?

Paraphrasing, it says "you got this because you filed a 5500."  

52 minutes ago, Bird said:

I just got one for our plan.  Can I send it to you to deal with? ?

Paraphrasing, it says "you got this because you filed a 5500."  

Uh, NO! (We're now up to 6).  And it says the same thing (except none of the plans that got them actually had ADRs - except perhaps in the mutual funds they held - which should be dealt with at the mutual fund level, and not at the plan level.

If a plan's fiduciary finds the expense of allocating an amount among participants overwhelms the amount of the settlement proceeds received, what instruction do you ask for?

That the settlement proceeds be allocated to a plan-expenses account?

If the plan does not already have a plan-expenses account, do you establish one?

Are there other practical solutions?

I've gotten a few - two for my own small 401k, but others for balance-forward, pooled, allocated profit-sharing plans.  Was not a problem (obviously?).  I got a BP settlement check that was almost a grand.

Some of our clients received postcard notices...  the postcard notice refers you to this website:  https://bnymadrerisasettlement.com/:

If you click on [More Information] button above "File Your Claim" it leads you to this page:

https://bnymadrerisasettlement.com/file-your-claim/

Then Clicking on the [I received a post card] button: https://bnymadrerisasettlement.com/potential-class-entities/ leads you here:

Potential Class Entities

If Your Entity received Postcard Notice of this Settlement, not a Validation Letter, Your Entity is a Potential Class Entity.  If you believe Your Entity held BNYM ADRs that may be covered by this Settlement and wishes to be eligible to receive a payment from the proceeds of the Settlement, Your Entity must complete and submit a Claim Form with adequate supporting documentation no later than April 29, 2019.

SUBMIT CLAIM FORM

Your Entity may call 1-855-773-0250 or send an e-mail to info@BNYMADRERISASettlement.com to request assistance in completing the online Claim Form.  Please retain all of Your Entity’s records of its holdings in BNYM ADRs, as they may be needed to document Your Entity’s claim.  If Your Entity is a Potential Class Entity and does not submit a valid Claim Form and adequate supporting documentation, it will not be eligible to share in the Net Settlement Fund.

I also have a client who received this BNYM ADR postcard yesterday.  Maybe others too, who just haven't contacted me.

Very interesting discussion of a grey issue, but as to the specifics, notices were sent out to plans that filed a 5500 and had a connection to BNY. In many cases this would be that the plan was on a Pershing platform in whole or part, Pershing being a division of BNY. As noted, issue involved overcharges in respect of ADRs, a list of which can be found on the referenced website bnymadrerisasettlement.com. These are all individual securities. The settlement does not involve ADRs held within mutual funds, ETFs or collective funds. Also, a small correction to the facts stipulated in the initiating question: doing nothing (i.e. not responding) precludes the plan from receiving a settlement, but does not prevent the plan from being bound by the settlement terms. In other words, if the plan wishes to pursue a separate action, do it now or be bound by the settlement terms.