Employer Stock Roundtable

We had a great client Dorsey Roundtable this morning to discuss employer stock in retirement plans. It’s been a few years now since the 2013 blockbuster opinion from the Supreme Court (back when they had 9 justices) in Fifth Third Bancorp v. Dudenhoeffer that gave some direction on this thorny topic.

Andrew Holly, one of our resident ERISA litigators, provided us with his typical pithy summary of the Dudenhoefer holding:

  • There is no special presumption that investments in company stock are prudent, but a “plausible” violation must be pled for a case to go forward.
  • Fiduciaries are not required, or allowed, to trade on inside information in violation of insider trading rules.
  • Under efficient market theory, fiduciaries may rely upon publicly available stock price to determine value absent “special circumstances.”
  • Allegations must plausibly allege remedial steps would have actually benefited participants.

Other discussion topics included:

  • Plan document, i.e., to hardwire or not?
  • Practical risk mitigation, e.g., message from the top that employees will not be viewed as “disloyal” if they diversify, effective communications that might be used as evidence when things get messy, etc.
  • Independent fiduciaries – pros and cons.
  • Committees – who serves & how many?
  • Investment Policies – the holy grail?

We expect to continue this discussion along with other topics in our 2016 Roundtables.

Bob Seng

With plenty of experience in private practice and as an Assistant General Counsel for Pay & Benefits in a Fortune 50 Company, Bob understands that employee benefits law isn’t for everyone. That’s why he takes pride in listening carefully and responding with clear answers and advice that can be followed by busy clients.

Andrew Holly

Andrew represents clients in a wide range of complex civil matters.

Tim Goodman

Tim Goodman works with employers on medical plans, retirement plans, executive compensation, and a wide range of benefits. Tim works with a broad array of employers, with a special focus on assisting cooperatives, agribusiness companies, hospitals and health care entities, banks and financial institutions, and Alaskan Native Corporations.Employers have Tim provide advice on health care reform (the ACA), wellness plans, and other welfare plan matters (ranging from cafeteria and health FSAs to severance and tuition plans). With respect to health care reform, Tim advises employers on the new fees (from the employer shared responsibility fee to the Cadillac tax), assists them in preparing for reporting on Form 1095-C, and explains the new requirements ranging from notice requirements to plan mandates.Tim recognizes the complex nature of the rules governing retirement plans and works with employers to review operations, address errors, and help employers maintain the tax-qualified status of their plans. Tim advises employers on qualified and nonqualified retirement plans (including defined benefit, 401(k), 403(b), 457(b), and 457(f) plans, and section 409A).

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