The International Foundation of Employee Benefit Plans has published an article entitled “Changes in Legal Landscape Turn Fiduciary Response Upside Down in 2004.” The article notes some interesting statistics:
A recent survey conducted by the investment advice firm, Financial Engines, found that 73% of plan sponsors believe their fiduciary responsibilities or liabilities have increased over the past 12 to 24 months. . . . At the same time, according to the survey, which was conducted at the beginning of February, only 48% of sponsors agree that their role as a fiduciary is clear. . .
The article makes a good point about the need for those advising retirement committees (attorneys, consultants, etc.) to educate and train the retirement committees about their fiduciary duties under ERISA. Dittos on this quote from Michael E. Falcone, a vice president with Aon Consulting’s Employee Benefits Group:
“I think one of the things they [attorneys, consultants, etc.] can do is do some fiduciary training for the committees, to make the committees aware of what their responsibilities are,” he explains. “But they also can talk about how they’re going to help the committees [fulfill]. . . their fiduciary duties. Make sure the fiduciaries have all the information they need to do their right job-disclosure on fees, fund reviews.”
Regarding ERISA fiduciary duty pertaining to company stock, the article makes the statement that “[a]mong the outstanding issues regarding company stock is whether sponsors have to disclose nonpublic data to participants” and that “[c]ourts have yet to rule on that question.” Please note that there have been some recent decisions holding that those individuals who serve on retirement committees and who are also corporate insiders with “inside information,” may under some circumstances have an obligation to disclose such information to other plan fiduciaries and participants. See Opinion and Order entered in the In Re WorldCom, Inc. ERISA Litigation and this post at Benefitsblog–“From My Notes: Review of the In re: WorldCom, Inc. ERISA Litigation Opinion“–as well as the Memorandum and Order entered in the In Re Enron ERISA Litigation which states:
The duty to disclose the relevant information to the plan participants and beneficiaries, which the Plaintiffs assert these Defendants owed as ERISA fiduciaries, is entirely consistent with the premise of the insider trading rules: that corporate insiders owe a fiduciary duty to disclose material nonpublic information to the shareholders and trading public.
Also, regarding fiduciary duties pertaining to recent mutual fund developments, the following articles discuss the DOL’s recent guidance issued addressing “Duties of Fiduciaries In Light of Recent Mutual Fund Investigations”:
- Paul, Hastings, Janofsky & Walker LLP: “Department of Labor Indicates That Companies Should Review 401(k) Plan Investment Options in Light of Mutual Fund Investigations”
- BNA Tax Management: “DOL Provides Fiduciary Guidance for Dealing with Mutual Fund Abuses”
- Kirkpatrick & Lockhart LLP: “DOL Provides Fiduciary Guidance for Dealing with Mutual Fund Scandal”
- Kilpatrick Stockton LLP: “EBSA Assistant Secretary States Views on Market Timing and Late Trading“
You can read previous posts here at Benefitsblog about ERISA fiduciary compliance at this link.