While much of the 401(k) fiduciary litigation in recent years has focused on investment and recordkeeping expenses, a large number of claims filed against 401(k) fiduciaries have alleged that fiduciaries simply made a bad investment decision. Most of these claims are related to employer stock and fall into a niche area of 401(k) fiduciary litigation often referred to as “stock drop” litigation. But occasionally, a claim is filed against 401(k) plan fiduciaries that alleges a poor investment decision regarding one or more of a plan’s core investment funds.Recently, breach of fiduciary duty claims were filed against fiduciaries of the Walt Disney Company and FMC Corporation 401(k) plans regarding the inclusion of the Sequoia Fund (a mutual fund) in their plans’ investment lineups. Both of the claims allege that the plan fiduciaries breached their fiduciary duties under the Employee Retirement Income Security Act of 1974 (ERISA) by failing … [Read more...] about 401(k) Plan Sponsor ERISA Fiduciary Litigation Update: Sequoia Fund Litigation
Massmutual 401k funds
One of your company’s 401(k) investment fund options is underperforming. Or, perhaps the fund is no longer appropriate for your employees. Or, perhaps a fund’s wildly successful fund manager has jumped ship to another fund company, investors are fleeing the fund in droves, and you do not want your plan to be last off the sinking ship. At any rate, the fund no longer has a place in the plan’s investment menu, and it’s time for it to go.With this decision come a number of responsibilities. The plan sponsor may need to convene an emergency meeting of the investment committee, review plan documents and the investment policy statement to make sure that procedures are followed, and identify a replacement fund, among other things. And importantly: the plan sponsor will need to review the Sarbanes-Oxley “blackout notice” rules to see if any participant notice requirements will be triggered by the changes.How Did the Blackout Notice Rules Come About?The … [Read more...] about Lights Out for a 401(k) Investment Fund? Don’t Forget the Blackout Notice Rules.
In the last several months, plaintiffs have filed multiple class action lawsuits against plan sponsors, plan fiduciaries and stable value fund providers. These lawsuits, which have involved 401(k) plans sponsored by large corporations, have alleged that:Plan fiduciaries breached their fiduciary duties under the Employee Retirement Income Security Act of 1974, as amended (ERISA), by investing in poorly performing stable value funds, failing to monitor the investments during periods of poor performance and high fees, and improperly benchmarking stable value funds against other lower cost and higher yielding investment options; andStable value fund providers violated their fiduciary duties under ERISA by offering imprudent, low-yielding investments and charging inappropriately high fees.These lawsuits have also included allegations that plan fiduciaries breached their fiduciary duties of loyalty and prudence under ERISA by:Causing plans to pay unreasonably high investment management fees … [Read more...] about 401(K) Plan Sponsors and Fiduciaries Face an Alarming Number of Stable Value Fund and Other Class Action Lawsuits
Laura Seitz, Deseret News FILE - Orem Mayor Richard Brunst speaks at a ground breaking ceremony at University Place in Orem on Thursday, Feb. 5, 2015. OREM — Orem's mayor is under investigation for allegedly making unauthorized withdrawals from his city retirement account, the City Council said Thursday. The city began looking into Mayor Richard Brunst in May after irregularities were discovered in forms he used to make withdrawals, according to city spokesman Steven Downs. Brunst is accused of changing dates associated with his signature and the signatures of city employees, submitting the same signed forms for reimbursement requests multiple times, and submitting reimbursement requests more frequently than is permitted under his retirement plan. The council brought in a third party to investigate the irregularities, and after discussing the situation in closed sessions decided this week to send the case to the Orem Police Department for an investigation, Downs said. The … [Read more...] about Orem mayor under investigation for misuse of retirement funds
In Golden Star Inc. v. MassMutual Life Ins. Co., 2014 WL 2117511 (D. Mass. May 20, 2014), a district court addressed two issues that have become hotly contested in 401(k) plan fee litigation: (1) whether and when a plan provider’s possession or exercise of discretion over fees confers fiduciary status; and (2) whether, to be a fiduciary with respect to plan investments, a plan provider must not only possess, but actually exercise discretion over the investment options offered by the plan.MassMutual offered plaintiff Golden Star (the plan sponsor and named fiduciary) recordkeeping and other services for its 401(K) plan. MassMutual defined the menu of investment options offered, and Golden Star selected the options to be offered in its plan from that menu. The mechanism for these investments was separate accounts owned by MassMutual as an insurer; MassMutual would pool the investments of several 401(K) plans investments into these separate accounts and then invest the accounts … [Read more...] about The Debate Continues Over The Fiduciary Status of 401(k) Plan Service Providers