The Eighth Circuit held that defined benefit pension plan participants who alleged breach of fiduciary duty and prohibited transaction claims under ERISA lacked standing to assert their claims because, during the course of the litigation, the plan became overfunded. Plaintiffs brought suit after the plan lost $1.1 billion, which plaintiffs claimed arose from imprudent investments
Prohibited Transaction
U.S. DOL Proposes Delay of Conflict of Interest Rule and Related Exemptions
By Benjamin Saper, Russell Hirschhorn & Seth Safra on
On March 1, 2017, the U.S. Department of Labor proposed a 60-day delay of the conflict of interest rule and related exemptions (currently set to be applicable on April 10, 2017). The Department opened two comment periods related to the rule:
- A 15-day comment period (ending March 17, 2017) on whether enforcement of the rule
…
U.S. DOL To Issue Final Rule and Exemptions on Fiduciary Standards
Today, the U.S. Department of Labor will release its highly-anticipated Final Rule and Exemptions addressing when a person providing investment advice with respect to an employee benefit plan or individual retirement account is considered to be a “fiduciary” under the Employee Retirement Income Security Act of 1974 and the Internal Revenue Code. According to a Fact Sheet released in advance of the new rule’s publication, the “DOL has streamlined and simplified the rule to minimize the compliance burden and ensure ongoing access to advice, while maintaining an enforceable best interest standard that protects savers.” According to the Fact Sheet:
- The rule requires more retirement investment advisers to put their client’s best interest first, by expanding the types of retirement advice covered by fiduciary protections
- The rule clarifies what does and does not constitute fiduciary advice
- The exemptions will allow firms to accept common types of compensation – like commissions and revenue sharing payments – if they commit to putting their client’s best interest first
- The rule and exemptions ensure that advisers are held accountable to their clients if they provide advice that is not in their clients’ best interest
U.S. District Court Rules that Float Income Earned by Fidelity Is Not a Plan Asset
By Robert Rachal on
Four class actions were consolidated in the U.S. District Court for the District of Massachusetts challenging whether float income earned on monies pending a transaction was a “plan asset.” In re Fidelity ERISA Float Income, No. 13-10222, 2015 WL 1061497 (D. Mass. March 11, 2015). Plaintiffs argued that if float was a plan asset, then Fidelity breached its fiduciary duties and committed a prohibited transaction by keeping this float income for its own benefit. Applying ordinary notions of property rights, the District Court held that float income was not a plan asset.