Law.com is reporting: “Merrill Lynch Wins Workers’ Suit Over WorldCom 401(k) Choices.” The article reports that “Southern District of New York Judge Denise Cote, who is also presiding over WorldCom’s securities class action cases, held that as a “directed trustee” under ERISA, Merrill Lynch’s fiduciary duties were limited in nature and that its decision not to block investment in WorldCom stock by the company’s 401(k) participants did not amount to a breach of its fiduciary duties.” The article further notes Judge Cote’s statements regarding the “duty of inquiry”:
“When a directed trustee receives a direction to invest plan assets in the securities of a company … [it] has a fiduciary duty of inquiry under ERISA when it knows or should know of reliable public information that calls into serious question the company’s short-term viability,” Judge Cote held.“Knowledge that a company’s fortunes are declining does not impose a duty of inquiry,” she continued.
More on this when I have had a chance to read through the decision. . .