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Supreme Court Axes "Presumption of Prudence" in ESOP Stock-Drop Cases

On June 25, 2014, the U.S. Supreme Court issued a decision that gives comfort to "stock-drop" plaintiffs and may cause shockwaves among employee stock ownership plan (ESOP) fiduciary committees. In Fifth Third Bancorp v....more

Supreme Court Rejects “Presumption of Prudence,” Adopts New Pleading Standards in Fifth Third Bancorp v. Dudenhoeffer

The Supreme Court of the United States has issued its highly anticipated decision in Fifth Third Bancorp v. Dudenhoeffer, No. 12-751. In an opinion written by Justice Breyer for a unanimous court, the Supreme Court held...more

The Mistaken Fiduciary: Can You Correct Overpayments to U.S. Retirees?

Even the best run pension plans occasionally pay retirees the wrong amount due to errors in employee classification, or calculating participant service or compensation. Correcting underpayments is easy enough – though it is...more

D.C. Circuit Rules That "Exhaustion of Administrative Remedies" Is Not Required For Violations of ERISA’S Statutory Guarantees:...

The U. S. Court of Appeals for the District of Columbia Circuit has joined five other federal circuits to rule that pension plan participants need not exhaust a plan’s internal remedial procedures before they file suit in...more

SEC Settles with Hedge Fund Adviser over Principal Transactions and Retaliation Against Whistleblower

The SEC settled administrative proceedings against an investment adviser, Paradigm Capital Management, Inc. (the “Adviser”), and Candace King Weir, the Adviser’s principal owner (the “Principal”), over violations of the...more

The Supreme Court Of The United States Holds That ESOP Fiduciaries Are Not Entitled To A Presumption Of Prudence, Clarifies...

On June 25, 2014, the Supreme Court of the United States unanimously held that there is no special presumption of prudence for fiduciaries of employee stock ownership plans (“ESOPs”). Fifth Third Bancorp v. Dudenhoeffer, No....more

Sharply Divided Illinois Supreme Court Narrows Circuit Court Jurisdiction Over Pension Board Decisions

In its second significant decision on public employee pensions of the morning, the Illinois Supreme Court has reversed the Appellate Court in The People ex rel. Madigan v. Burge. In an opinion by Justice Anne M. Burke, joined...more

Illinois Supreme Court Adopts Broad Construction of Constitutional Pension Clause

The Illinois Supreme Court has issued its much-anticipated opinion in Kanerva v. Weems. Kanerva represents the Court’s first opportunity to address the state Constitution’s Pension Protection Clause since the Illinois General...more

ESOP Fiduciaries Not Entitled to Presumption of Prudence

In Fifth Third Bancorp v. Dudenhoeffer, the U.S. Supreme Court unanimously held that there is no presumption of prudence for fiduciaries of an employee stock ownership plan (ESOP) who invest in employer securities. The case...more

Supreme Court Abolishes Presumption of Prudence in ERISA Stock-Drop Cases But Sets High Bar for Plaintiffs

In an opinion that reversed nearly two decades of lower-court ERISA class action jurisprudence, the Supreme Court axed the well-established “presumption of prudence” in ERISA “stock-drop” cases. On June 25, the Court issued...more

ESOPs’ Fables: On Winning Wars but Losing Battles

As the end of the Supreme Court term approached, decisions came down fast and furious. Last week’s big decisions, at least around our nerdish water cooler, were Halliburton and Fifth Third Bancorp v. Dudenhoeffer. (Yes, we...more

Supreme Court’s Dudenhoeffer Decision Headlines New ERISA Litigation Update

Goodwin Procter’s ERISA Litigation Practice published its latest quarterly ERISA Litigation Update. The update discusses (1) the Supreme Court’s ruling in Fifth Third Bancorp v. Dudenhoeffer that there is no “presumption of...more

Big Day Tomorrow - Two Public Pension Opinions Coming From the Illinois Supreme Court

The Illinois Supreme Court has announced that opinions in two cases addressing public employee pensions, Kanerva v. Weems and People ex rel. Madigan v. Burge, will be filed tomorrow morning at 9:00 a.m. With the Governor...more

SEC Enforces First-Ever Dodd-Frank Whistleblower Retaliation Claim

The U.S. Securities and Exchange Commission recently entered into a $2.2 million settlement agreement with Paradigm Capital Management Inc. and its owner Candace King Weir, in its first-ever action enforcing whistleblower...more

Second Circuit Affirms Dismissal of Stock Drop Challenge on Grounds Unrelated to Moench

Prior to the Supreme Court’s decision in Fifth Third Bancorp v. Dudenhoeffer, the central issue in nearly every case alleging the imprudent investment of plan assets in employer stock has revolved around whether plan...more

The Danger of Retaliating Against Whistleblowers

Every company claims that they encourage a “speak up” culture. As part of a “speak up” culture, companies encourage managers and employees to raise concerns about potential violations and promise not to retaliate against...more

Ninth Circuit Holds that Monetary “Make-Whole” Relief Is Not Available Absent Loss to Plan or Unjust Enrichment for Defendant...

A Ninth Circuit panel recognized that reformation, equitable estoppel and surcharge were among the “appropriate equitable relief” potentially available under Section 502(a)(3) of ERISA (following dictum in CIGNA Corp. v....more

Dudenhoeffer Eschews Moench Presumption But Encourages Careful Scrutiny Of Complaints: Future for ERISA Stock-Drop Litigation Is...

Certain retirement plans, such as employee stock ownership plans (“ESOPs”), are specifically designed to invest all or a portion of their assets in stock of the sponsoring employer. For nearly twenty years, the federal courts...more

SEC Makes First Finding of Retaliation in Violation of the Exchange Act’s Anti-Retaliation Rule

On June 16, 2014, the SEC entered an order (the “Order”) instituting cease and desist proceedings against an investment adviser, Paradigm Capital Management, Inc. (“Paradigm”), and Paradigm’s founder, Director, President,...more

In ERISA Stock Drop Case, Supreme Court Giveth and Taketh Away on Moench Presumption

The U.S. Supreme Court recently eviscerated a key protection against stock drop lawsuits filed by participants in defined contribution plans that hold employer stock as an investment. In Fifth Third Bancorp et al. v....more

One, Two Punch for Moench – Supreme Court Eliminates Presumption for Employer Stock Investments

The United States Supreme Court issued a unanimous opinion on June 25, 2014 in the case of Fifth Third Bancorp v. Dudenhoeffer. While the Supreme Court’s holding substantially affects the fiduciaries of all employee stock...more

Bankruptcy Protection for Inherited IRA

The already complicated subject of how to handle Individual Retirement Accounts following the death of an IRA holder just got a little more complicated with the recent Supreme Court decision in Clark v. Rameker. The issue in...more

U.S. Supreme Court Releases Two Major Securities Opinions

Earlier this week, the U.S. Supreme Court released its decision in Halliburton Co. v. Erica B. John Fund, Inc., (U.S., No. 13-317)( Halliburton II), and for a second time vacated a decision by the Fifth Circuit on whether the...more

Supreme Court Does Away with the Presumption of Prudence: What's Next for Employer Stock Funds in 401(k) Plans and ESOPs?

On June 25, 2014, the United States Supreme Court issued its much anticipated “stock drop” decision in Fifth Third Bancorp v. Dudenhoeffer, ___ U.S. ___ (2014). The Court, in vacating the Sixth Circuit’s ruling, held that...more

Supreme Court Strikes Down Presumption of Prudence to ESOP Fiduciaries

In Fifth Third Bancorp v. Dudenhoeffer,1 the U.S. Supreme Court yesterday held that ESOP (employee stock ownership plan) fiduciaries are not entitled to any special presumption of prudence and are subject to the same duty of...more

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