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Best Interest Rules In Fiduciary Responsibility Introduced By Security And Exchanges Commission

  

Many regulations put into place during the past few years have faced the potential for roll-backs under the current administration. This holds especially true for some controversial rules issued by the Department of Labor. These roll-backs, though, have introduced their levels of uncertainty into the marketplace, placing companies at considerable risk of unwittingly acting against their own interests.

More Court Decisions And Promised Federal Action On Fiduciary Responsibility

 

 On March 15, 2018, the United States Court of Appeals for the Fifth Circuit dealt Obama era regulations their most recent defeat. In the wake of numerous other overturned rules by regulatory action or executive order, a federal court struck down the Department of Labor’s fiduciary rule. The rule revised the definition of who constituted a fiduciary of retirees under the Employee Retirement Income Security Act (“ERISA”) and changed the exemptions available to advisors who sought to earn commissions for investment advice.

Higher Education The Focus Of Fiduciary Risk Litigation

 

In 2016, the same law firm started twelve different lawsuits against twelve different universities alleging violations of federal retirement law. Schlichter, Bogard, and Denton is often credited with starting the trend of filing lawsuits over excessive fees charged to retirement plans and has apparently moved on to 403(b) plans offered by nonprofit organizations. The university lawsuits alleged similar violations of the Employee Retirement Income Security Act (“ERISA”), claiming that the universities violated their obligation to their employees by failing to take steps to keep fees low while maximizing returns. The trouble for these organizations is that 403(b) plans and 401(k) plans have the same obligations under ERISA. The naming distinction comes from how such plans are treated under the tax code.

Ongoing, Expensive Litigation Of Fiduciary Liability Complaints Against JP Morgan

Litigation related to retirement plans continues to be a major issue facing businesses in the United States.  Companies must offer recruits and employees some form of retirement plan in order to attract and retain quality employees in a competitive labor environment.  At the same time, the fiduciary duties places on companies by the Employment Retirement Income Security Act (“ERISA”) and the regulations promulgated by the Department of Labor (“DOL”), and the Security Exchanges Commission (“SEC”) to enforce it can expose employers and the parties whom they hire to manage those plans to expensive litigation.  A wave of recent cases highlight both the cost of these cases and some pitfalls to avoid.

Market Fluctuations Cause Fiduciary Issues Under ERISA

ERISA, the federal Employee Retirement Income Security Act, sets standards that govern the management of private retirement plans such as 401(k)s, defined benefit plans (more commonly called pensions), employee stock ownership plans, and profit sharing plans. Generally speaking, the appellate courts across the US have generally adopted standards that make it more difficult for employees to sue under allegations of mismanagement for these plans.

Businesses Need To Be Protected In Many Ways Due To ERISA-Related Risk


As more and more companies face litigation related to their retirement plans, executives naturally wonder how they can best protect themselves and their company from expensive and time-consuming litigation.  Over the past few years, total settlements from retirement plan related litigation have averaged approximately one billion dollars a year.  While this number may pale in comparison to the almost twenty seven trillion dollars held in various retirement assets within the United States, it represents a substantial threat to bottom line of many businesses.

Companies Of All Sizes Consider Employee Stock Ownership Programs For ERISA Compliance And Their Future

The Employee Retirement Income Security Act, more commonly known by its acronym ERISA, places a number of requirements on companies that seek to implement retirement plans for their employees.  These requirements generally aim to ensure that such plans are managed in the best interests of the employees and that those managing such plans fulfill their duties as fiduciaries for those employees.  Lawsuits under ERISA have targeted companies for failing to move away from high fee investment funds or failures to sufficiently diversify.  Recently, a number of lawsuits have also targeted retirements plans using a slightly different focus: the acquisition and holding of company stock.

ERISA and 403b- What Non-Profits Need to Be On The lookout for

Lawsuits over retirement plans and the failure of organizations to meet their fiduciary duties under the Employee Retirement Income Security Act (ERISA) continue to proliferate and make the news.  Previous defendants in these suits include high profile companies like Lockheed Martin and Boeing.  Now these lawsuits have expanded to include non-profit organizations such as educational institutions and hospitals. 

Department Of Labor Releases Final Rules Of Fiduciary Duty In Retirement Planning

 

After more than five years of work, the Department of Labor finally released its final rule redefining the concept of fiduciary duty in the context of retirement planning advice.  The new rule, replacing standards that have been in place since 1975, comes with a significant amount of controversy.  Republicans in Congress have made their unhappiness with the new rule clear and the Securities and Exchanges Commission, who have their own, separate definition of fiduciary duty and the circumstances in which it applies, have expressed their own concerns with the effect of the DOL rule.

Supreme Court Rules On 401ks: What You Need To Do About It

 

For the second time in a year, the United States Supreme Court issued a 9-0 unanimous opinion regarding the duty of employer investment plans. Last year, the Court rejected the so-called presumption of prudence as it relates to Employee Stock Ownership Plans (ESOPs). This month, the Court employed a continuing duty of prudence standard in refusing to dismiss a suit related to a 401(k) plan under a six-year statute of limitations.