Current Events

DOL finalizes re-definition of ERISA “investment advice fiduciary”

April 11, 2016

On April 6, 2016, the Department of Labor finalized its regulation re-defining who is an “investment advice fiduciary” under ERISA. In connection with that regulation it also finalized two new prohibited transaction exemptions (PTEs) and amendments (and revocations) of certain prior PTEs. With this regulation package, DOL is expanding those situations in which giving investment advice to an employee benefit plan, plan fiduciary, participant, or IRA owner makes the advice-giver an ERISA fiduciary (“investment advice fiduciary”). It significantly changes what sorts of advice may be given, to whom and in what circumstances. Read More

Company stock and inside information: DOL’s view

April 05, 2016

In the aftermath of the Supreme Court’s 2014 decision in Fifth Third Bancorp et al. v. Dudenhoeffer, the stock drop lawsuits that are getting the most traction with courts generally involve claims that plan fiduciaries were aware of inside information on the basis of which they could have reasonably concluded that the company stock’s market price was “artificially inflated.” Plaintiffs are asserting that in those circumstances plan fiduciaries should (at a minimum) have stopped buying company stock. (“Stock drop” cases involve company stock held in, e.g., a 401(k) plan that has lost significant value (hence, "drop"), in which the plaintiff argues the plan’s fiduciaries had an obligation to sell plan stock (or not continue to buy it) before or during the “drop.”) Read More

Tatum v. R. J. R Part 3

March 15, 2016

In February 2016, the United States District Court for the Middle District Of North Carolina handed down its (second) decision in Tatum v. R.J. Reynolds Tobacco Company, holding (again) that even though the plan fiduciaries violated “procedural prudence” in selling Nabisco stock held by the R. J. Reynolds defined contribution plan, their decision to do so was “substantively prudent” and therefore did not violate ERISA. Read More

Final Best Interest Contract Exemption

April 11, 2016

The Department of Labor’s conflict of interest regulation package, re-defining who is an ERISA “investment advice fiduciary,” re-labels many relationships as “fiduciary” that, under current rules, aren’t. The new regulation includes a “sellers exception” for advice in connection with arm’s length transactions, generally available with respect to “institutional” advice recipients. With respect to “retail” advice, including advice to plan participants, as part of the package, DOL also finalized a Best Interest Contract Exemption (BICE). The BICE allows Advisers receiving “conflicted payments,” and related Financial Institutions, to provide advice to plan participants (and to IRA holders and small plans), so long as certain conditions are met. Read More

De-risking in 2016

March 25, 2016

In this article we discuss how changes in interest rates, Pension Benefit Guaranty Corporation premiums and mortality tables may affect sponsor decisions to de-risk (or not de-risk) defined benefit plan liabilities in 2016. For purposes of this article, by de-risking we mean paying out a participant’s benefit as a lump sum and thereby eliminating the related liability. Read More

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