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Text of Supreme Court Opinion: ESOP Fiduciaries Not Entitled to Presumption of Prudence (PDF)
Supreme Court of the United States Link to more items from this source
June 25, 2014
"ESOP fiduciaries, unlike ERISA fiduciaries generally, are not liable for losses that result from a failure to diversify. But aside from that distinction, because ESOP fiduciaries are ERISA fiduciaries and because 1104(a)(1)(B)'s duty of prudence applies to all ERISA fiduciaries, ESOP fiduciaries are subject to the duty of prudence just as other ERISA fiduciaries are.... [T]he potential for conflict is the same for an ESOP fiduciary whose company is on the brink of collapse as for a fiduciary who is invested in a healthier company.... [T]he duty of prudence, under ERISA as under the common law of trusts, does not require a fiduciary to break the law.... The courts should consider the extent to which an ERISA-based obligation either to refrain on the basis of inside information from making a planned trade or to disclose inside information to the public could conflict with the complex insider trading and corporate disclosure requirements imposed by the federal securities laws or with the objectives of those laws.... Lower courts faced with such claims should also consider whether the complaint has plausibly alleged that a prudent fiduciary in the defendant's position could not have concluded that stopping purchases ... or publicly disclosing negative information would do more harm than good to the fund by causing a drop in the stock price and a concomitant drop in the value of the stock already held by the fund. " [Fifth Third Bancorp v. Dudenhoeffer, No. 12-751 (S. Ct. June 25, 2014)]

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