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Selected TopicERISA Fiduciary Duty
Since 2012, US Department of Labor (DOL) regulations under ERISA Section 408(b)(2)—a statutory exemption from the ERISA prohibited transaction provisions—have required certain service providers to employer-sponsored retirement plans to make detailed disclosures about their services and related “direct” and “indirect” compensation to a “responsible plan fiduciary” of the plan.
There was an important development recently in the US Department of Labor’s (DOL’s) efforts to regulate ERISA plan fiduciaries’ use of environmental, social, and governance (ESG) factors in investment decisionmaking. On October 30, the DOL announced publication of the final version of its proposed Financial Factors in Selecting Plan Investments rule (the Rule). A fact sheet is also available.
The US Department of Labor (DOL) released its 2020 statistics on ERISA enforcement activities on October 27, affirming that the agency’s investigations remain robust. In sharing the statistics, the DOL not only boasted that it had restored $3.1 billion to employee benefit plans, participants, and beneficiaries, but also that this amount is the “most ever” that the agency has recovered in one year.
Congratulations to Elizabeth (Liz) Goldberg and Erin Randolph-Williams on their election to the Morgan Lewis partnership in our employee benefits and executive compensation practice! Effective today, Liz (resident in Pittsburgh) and Erin (resident in Philadelphia) will join 23 other newly elected partners from 10 offices and eight practices.
Keeping up the steady stream of new and proposed guidance coming from the US Department of Labor (DOL), the Employee Benefits Security Administration issued a proposed regulation on September 4, 2020 that would require significant changes in how ERISA fiduciaries consider and approach proxy voting and the exercise of other shareholder rights.
As environmental, social, and governance (ESG) considerations continue to gain traction with investors, asset managers are confronted with varying levels of regulation that they must balance with the wide array of ESG demands being made by investors. Our global investment funds team has prepared a White Paper as a regulatory framework to navigate such considerations across the United States, United Kingdom, European Union, Hong Kong, and Singapore.
For our clients, we have formed a multidisciplinary Coronavirus COVID-19 Task Force to help guide you through the broad scope of legal issues brought on by this public health challenge. Find resources on how to cope with the post-pandemic reality on our NOW. NORMAL. NEXT. page and our COVID-19 page to help keep you on top of developments as they unfold.
In a 5-4 decision in Thole v. U.S. Bank N.A., the US Supreme Court has ruled that defined benefit plan participants lack Article III standing to sue for fiduciary breaches that do not harm the individual participants. As the Court noted, “[u]nder ordinary Article III standing analysis, the plaintiffs lack Article III standing for a simple, common-sense reason: They have received all of their vested pension benefits so far, and they are legally entitled to receive the same monthly payments for the rest of their lives.
While much of the attention by regulators has been focused on the coronavirus (COVID-19) response and CARES Act/FFCRA guidance, they have not forgotten about the SECURE Act’s introduction of pooled employer plans (PEPs) (centrally administered defined contribution plans that can be joined by multiple unrelated employers).