Article by Joshua Sutin, Katherine Noll and Lauren Parker on "Lessons in Fiduciary Duty from Employee Stock Plan Ruling"
In a recent Expert Analysis column for Law360, Joshua Sutin, Katherine Noll and Lauren Parker discuss “Lessons in Fiduciary Duty from Employee Stock Plan Ruling” based on a recent U.S. District Court for the Southern District of New York opinion and order involving a valuation of an underlying employer stock that was found to contain material defects.
Not only must fiduciaries do their duties, but they also must do them well. The court outlined several major failures of the trustee and found that while any one of these failures alone may not be sufficient to conclude that the trustee failed to meet its duty, the cumulative failures show that the trustee was insufficiently engaged in the transaction.
Moreover, vendors to qualified plans should be on notice that Employee Retirement Security Act preemption will not necessarily help them with state law claims of negligence — if filed timely — contract breaches and contribution claims. Plan sponsors should take note that they may be able to successfully pursue state law claims against vendors who breach their duties or contracts. However, a plan fiduciary must monitor their vendors as should a good plan settlor.
To learn more about the ruling and about the Department of Labor requirements for qualified plans trustees, read the full article here.