Fiduciary and Investment Issues Archives

DOL Proposed Regulations on Proxy Voting

by Todd Solomon and Brian Tiemann | Oct 27, 2020 | Employee Benefits, Fiduciary and Investment Issues

The Department of Labor (DOL) issued a proposed rule with 30-day comment period to address the application of fiduciaries’ duties with respect to proxy voting and exercises of other shareholder rights. The proposal requires fiduciaries to vote any proxy where the matter being voted upon would have an economic impact on the plan and prohibits fiduciaries from voting any proxy that does not have an economic impact on the plan. In our recent webinar, we reviewed the proposal and explained what the changes mean for plan sponsors.

View the slide deck here.

ESOP Litigants Play by Their Own Valuation Rules

by Richard J. Pearl | Aug 27, 2020 | Benefit Controversies, Digital Health, Employee Benefits, Employee Stock Ownership Plans (ESOPs), Fiduciary and Investment Issues, Retirement Plans

Imagine if you were playing on a baseball team and the opposing players argue that you are violating the rules of soccer. That’s what it’s like when private parties and the Department of Labor (DOL) challenge Employee Stock Ownership Plan (ESOP) valuations. Plaintiffs play a very different valuation ballgame, which confounds experts who go up against them in a dispute involving allegations that an ESOP paid more than “fair market value” for stock of the sponsor company. In a recent webinar, McDermott attorney Richard Pearl discussed valuation concepts and some fundamental issues under the Employee Retirement Income Security Act.

Updated PBGC Guidance for Defined Benefit Plans

by Jeffrey Holdvogt | Aug 21, 2020 | Employee Benefits, Fiduciary and Investment Issues, Retirement Plans

Earlier this year, the US Pension Benefit Guaranty Corporation (PBGC) issued a final rule, modifying PBGC regulations that apply to defined benefit pension plans. Among those changes were revisions to: (i) the reportable event notification requirements; (ii) annual financial and actuarial information (Form 4010) reporting; (iii) single-employer plan termination rules; and (iv) the premium rate calculation rules. The rule was generally effective on March 5, 2020, but some provisions have different applicability dates.

Access the article.

How Advisers Serving MEPs and PEPs Can Be Conflicted

by McDermott Will & Emery | Aug 7, 2020 | Fiduciary and Investment Issues, Retirement Plans

The most obvious potential conflict of interest for advisers setting up or serving pooled employer plans is if their practice is affiliated with the investments being selected—but there are other potential pitfalls to acknowledge.

In a recent article, Erin Turley, a partner with McDermott Will & Emery, said a potential conflict of interest for advisers to PEPs would be if they were acting as either a 3(21) or 3(38) fiduciary to help select investments and were paid from plan assets.

Access the article.

Illinois Federal Court Dismisses ERISA Claims Against 401(k) Fiduciaries

by Richard J. Pearl and J. Christian Nemeth | Aug 5, 2020 | Benefit Controversies, Fiduciary and Investment Issues, Retirement Plans

The Employee Retirement Income Security Act of 1974 (ERISA) requires plan fiduciaries to act prudently and loyally when making decisions about the plan. In Martin v. CareerBuilder, LLC, a federal district court held that the complaint’s allegations about expensive recordkeeping costs and imprudent investment options failed to give rise to an inference that the defendants violated their ERISA obligations.

Access the article.

COVID-19 Ate My Homework – Recent Extensions and Relief for Retirement Plans

by Allison Wilkerson, Diane Morgenthaler and Erin Steele | May 18, 2020 | Benefit Controversies, Employee Benefits, Employment, Fiduciary and Investment Issues, Retirement Plans

In recognition of the difficulties faced by retirement plan sponsors, participants and beneficiaries due to the COVID-19 pandemic, new guidance extends the deadlines for notices and disclosures required by Title I of ERISA and extends deadlines for retirement plan participants and beneficiaries to submit benefit claims and benefit appeals. The new guidance also provides some welcome fiduciary relief for electronic disclosures, incomplete plan loan or distribution documentation, as well as delayed participant contributions and loan repayments.

Access the full article.

SCOTUS Holds Proof of ‘Actual Knowledge’ Required Under ERISA Statute of Limitations

by Richard J. Pearl | Mar 3, 2020 | Benefit Controversies, Employee Benefits, Fiduciary and Investment Issues, Retirement Plans

The US Supreme Court handed workers a big win by preserving a six-year deadline to file ERISA class actions as the standard, but employers have already seized on language in Justice Samuel Alito’s opinion as a road map for how to impose a shorter deadline.

Justice Alito ended the unanimous opinion—which affirmed the Ninth Circuit’s ruling that ERISA grants workers six years to sue except under special circumstances—by listing several tactics employers can use to invoke a three-year statute of limitations.

McDermott’s Richard Pearl contributes to a Law360 article discussing the decision, including how employers should respond.

Access the full article.

Originally published on Law360, February 2020

See Richard Pearl’s January 2019 On the Subject on this case: Ninth Circuit Clarifies ‘Actual Knowledge’ for ERISA’s Statute of Limitations

Investor Guidelines for Shared Value Creation in Employee Ownership Transitions Unveiled

by Ted Becker | Feb 27, 2020 | Employee Benefits, Employee Stock Ownership Plans (ESOPs), Fiduciary and Investment Issues

One of the big questions for the employee ownership field is, why has the number of US employee-owned firms failed to grow significantly over the last couple of decades?

An upcoming paper from Fifty by Fifty proposes that the barrier to growth is a lack of agency. Employees don’t have the knowledge, skills or capital to pursue a buyout of their employer; and employers, knowing little about the benefits of selling to employees, are more likely to respond to an opportunity that knocks on their door, such as an offer from a private equity firm or a strategic buyer. McDermott’s Ted Becker and Erin Turley share their thoughts on the guidelines in a recent article published on Medium.

Access the full article.

Originally published on Fifty by Fifty, January 29, 2020

The Biggest ERISA Decisions of 2019

by Richard J. Pearl | Jan 14, 2020 | Benefit Controversies, Employee Benefits, Fiduciary and Investment Issues, Retirement Plans

In a relatively slow year for benefits rulings, multimillion-dollar settlements were the star of the show. And amid the slew of settlements this year, two court rulings stood out.

McDermott’s Richard J. Pearl contributes to a Law360 article that breaks down the Ninth Circuit ruling allowing benefit plan managers to force fiduciary-breach suits into solo arbitration and the Tenth Circuit holding that insurers who determine workers’ profits from 401(k) investments aren’t fiduciaries.

Access the full article.

Originally published by Law360, December 2019

Ninth Circuit Considers Rehearing in ERISA Arbitration Case

by Richard J. Pearl and Ted Becker | Nov 5, 2019 | Benefit Controversies, Fiduciary and Investment Issues, Retirement Plans

The Ninth Circuit signaled that it might rehear Dorman v. The Charles Schwab Corp., where earlier this year it held that a mandatory arbitration provision required arbitration of an ERISA fiduciary-breach claim.

Access the full article.

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