fiduciaries Archives - EMPLOYEE BENEFITS BLOG

US Supreme Court to Review Unusual Second Circuit Decision in Stock Drop Case Against IBM

by Allison Crowe and J. Christian Nemeth | Jun 11, 2019 | Benefit Controversies, Employee Stock Ownership Plans (ESOPs), Fiduciary and Investment Issues, Retirement Plans

On Monday, the US Supreme Court agreed to review the Second Circuit’s decision in Jander v. Retirement Plans Committee of IBM, a “stock drop” lawsuit against IBM’s benefit plan fiduciaries. The Second Circuit’s decision marked one of the few times a federal court permitted a “stock drop” lawsuit to survive dismissal since the Supreme Court’s decisions in Fifth Third Bank v. Dudenhoeffer (2012) and Harris v. Amgen (2016). Together, the Dudenhoeffer and Amgen decisions set a high pleading bar for plaintiffs who file “stock drop” claims. These lawsuits involve employee stock ownership plans, in which the plan includes employer stock as an investment option, and a subsequent drop in that stock’s price. Plaintiffs allege that by failing to remove the stock from the plan or take other corrective action (such as disclosing information), fiduciaries breached the prudent person standard of care that ERISA imposes on fiduciaries. Dudenhoeffer requires plaintiffs to...

Brown University Only Partially Successful in 403(b) Lawsuit

by J. Christian Nemeth, Joseph K. Urwitz and Mary K. Samsa | Jul 24, 2018 | Benefit Controversies, Fiduciary and Investment Issues, Retirement Plans

A federal judge in Rhode Island recently permitted several claims against Brown University to proceed in a lawsuit alleging that the university and its fiduciaries breached their fiduciary duties under the Employee Retirement Income Security Act of 1974, as amended (ERISA), by mismanaging Brown’s defined contribution plans. This decision follows the recent decision in a similar class action lawsuit against Northwestern University (see blog post here) in which a federal judge granted Northwestern a complete victory in its motion to dismiss. Unlike in that decision, the court in Short v. Brown University allowed plaintiffs to proceed with claims relating to record-keeping services, including engaging more than one record-keeper, incurring excessive administrative fees and failing to conduct a competitive record-keeping bidding process. Of note, the court indicated that whether particular record-keeping fees are excessive involves questions of fact that cannot...

Lessons Learned from ESOP-Owned Companies from Recent Litigation

by McDermott Will & Emery | Jul 17, 2018 | Employee Stock Ownership Plans (ESOPs)

Recent litigation and audit activity is focusing on the process undertaken by fiduciaries in connection with a transaction involving an ESOP. Eliot Burriss presented at the 2018 National Center for Employee Ownership Conference summarizing relevant litigation cases, exploring roles and responsibilities, and providing best practices. View the full presentation.

401(k) Lawsuits on the Rise: Best Practices for Plan Fiduciaries

by Todd Solomon | Nov 2, 2017 | Employee Benefits, Employee Stock Ownership Plans (ESOPs), Fiduciary and Investment Issues, Retirement Plans

At the 36th Annual ISCEBS Symposium, Todd Solomon presented best practices for plan fiduciaries to avoid 401(k) plan and 403(b) plan class action lawsuits. Todd discussed fiduciary responsibilities under ERISA as well as potential consequences of breaching fiduciary responsibilities. He highlighted notable cases brought against plan fiduciaries, including those that allege excess plan fees. Todd discussed the need for rigorous monitoring and documentation of the review process. View the full presentation.

View From McDermott: Employee Benefit Plan Considerations for Health Systems in 2017

by Jeffrey Holdvogt and Mary K. Samsa | Apr 4, 2017 | Employee Benefits, Health and Welfare Plans

Amy Gordon, Jeffrey Holdvogt, Susan Nash and Mary Samsa wrote this bylined article on health system employee benefit opportunities and challenges in 2017. The authors urged health systems to review internal controls for 403(b) plan compliance and new design opportunities for 457(f) plans, to review their short- and long-term health plan operation in light of any Affordable Care Act replacement. Read the full article.

ERISA Basics National Institute: Section 401(k) Plans

by Diane Morgenthaler | Nov 15, 2016 | Benefit Controversies, Fiduciary and Investment Issues, Retirement Plans

A 401(k) plan has a qualified cash or deferred arrangement that is part of a profit sharing plan or stock bonus plan. Under the Internal Revenue Code Section 401(k)(2), an employee may elect to make contributions to the plan, the covered employee’s contributions are not distributable before severance from employment, disability, death, attainment of age 59 ½, financial hardship, or termination of the plan, and under which the covered employee’s contributions are nonforfeitable. This presentation will address the following objectives: Who gets the money? What money do they receive? Where does the money go? When do they get the money? How is the money administered? View the presentations slides.

US Supreme Court to Review Unusual Second Circuit Decision in Stock Drop Case Against IBM

Brown University Only Partially Successful in 403(b) Lawsuit

Lessons Learned from ESOP-Owned Companies from Recent Litigation

401(k) Lawsuits on the Rise: Best Practices for Plan Fiduciaries

View From McDermott: Employee Benefit Plan Considerations for Health Systems in 2017

ERISA Basics National Institute: Section 401(k) Plans

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