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Investment Managers Turn to AI for Competitive Advantage and Efficiencies

"Enhancing operational efficiency, strengthening compliance and risk functions, and staying competitive with peers are leading reasons in-house counsel cited as primary motivations to implement Al."

Final Judgment in ESG Fiduciary Breach Claim: Monetary Damages Denied, but Targeted Equitable Relief Imposed

"The court issued tailored injunctions aimed at stewardship practices, fiduciary independence and transparency while declining to disturb the plans' investment structure.... [E]ven though there are no monetary damages, [the judgment] imposes significant restrictions on how American Airlines and its plan fiduciaries can manage their plans going forward.... ERISA fiduciaries should be taking steps to demonstrate how all investment decisions and shareholder engagement/proxy voting activities are driven by pecuniary objectives." [Spence v. Am. Airlines, Inc., No. 23-0552 (N.D. Tex. Sep. 30, 2025)]

Applying Sun Capital: District Court Finds Private Equity Fund Liable for ERISA Withdrawal Liability

"This decision ... is arguably the first time a district court applied the 'investment plus' and 'partnership-in-fact' tests for determining potential withdrawal liability in the private equity context since the First Circuit issued its rulings in Sun Capital ... in 2013 and 2019." [Longroad Asset Management LLC v. Boilermaker-Blacksmith National Pension Trust, No. 23-0738 (W.D. Mo. Aug. 19, 2025)]

Executive Order on Alternatives in 401(k)s: Key Takeaways for Fund Managers

"The prospect of relief from litigation risk may help plan sponsors to get comfortable offering alternatives within their 401(k) plans, even if any changes will not be finalized for some time.... While safe harbors are not by definition necessary to comply with the law, they can provide comfort to asset managers and plan fiduciaries."

DOL Sheds Light on Fiduciary Responsibilities That Arise with Pooled Employer Plans

"[The RFI] reminds employers that while they can mitigate their risk of ERISA fiduciary liability by having a PEP's pooled plan provider assume full responsibility for selecting and retaining investment managers, the employer still must prudently select and monitor the pooled plan provider. The RFI also solicits information about prevailing market practices in order to determine the need for a potential safe harbor to promote greater utilization of these plans[.]"

Executive Order Calls for Most-Favored-Nation Pharmaceutical Pricing for American Patients

"The Executive Order focuses on global differentials in drug pricing, noting that the United States has front-loaded the costs of global innovation, with foreign countries' health systems getting a 'free ride.' The stated purpose of the Executive Order is to stop American patients from paying higher prices for pharmaceutical products sold at lower prices in other countries."

New York City Pension Funds Double Down on Decarbonization: New Expectations Will Impact Managers and Their Portfolio Companies

"[T]he Teachers’ Retirement System (TRS), New York City Employees’ Retirement System (NYCERS) and Board of Education Retirement System (BERS) have instructed their public markets asset managers to submit a written plan describing their net zero plans, by June 30. In the written plans, the managers are expected to adopt the following practices ... [1] Engage portfolio companies to drive real economy decarbonization, not just portfolio decarbonization. [2] Incorporate material climate change-related risks and opportunities in investment decision-making. [3] Ensure a robust and systematic stewardship strategy that addresses prioritization and escalation of engagement and voting to advance decarbonization."

Plan Sponsors Beware: The U.S. Supreme Court Just Eased Requirements to File ERISA Prohibited Transaction Suits

"Under Section 406 of ERISA, every payment that an ERISA-covered plan provides to a service provider is automatically a prohibited transaction. In order to pay service providers, such as recordkeepers, a plan would normally rely on Section 408 of ERISA ... Under Cornell, plaintiffs can bring a claim based solely on the fact that the plan is paying its service providers, despite the exemption for retirement plan recordkeeping, investment advisor and other standard plan-related service providers." [Cunningham v. Cornell Univ., No. 23-1007 (S.Ct. Apr. 17, 2025)]

New York's Health Information Privacy Act Aims to Strictly Regulate Consumer Health Data

"NY HIPA seeks to impose more stringent regulation of consumer health care data given the increased monetization of consumer data, prevalence of online tracking technologies, and concerns arising from the [Dobbs] decision that information stored or obtained digitally can be used to prosecute individuals who seek abortions.... If signed into law, NY HIPA is positioned to be among the most extensive consumer health data privacy laws in the country."

Practical Takeaways for ERISA Plan Fiduciaries from District Court's ESG Ruling

"Plan sponsors may wish to conduct greater diligence and monitoring of investment managers' use of ESG and other collateral considerations in conducting business that impacts retirement plans.... ERISA plan fiduciaries that delegate proxy voting authority to their managers under the terms of their IMAs [may see] additional focus going forward on their monitoring and scrutiny of the voting activities of their managers.... Prudence is process: lessons for surviving a claim alleging breach of the duty of prudence.... The 2022 ESG rule remains in effect (for now)." [Spence v. Am. Airlines, Inc., No. 23-0552 (N.D. Tex. Jan. 10, 2025)]