Perspectives - Fall 2012 Volume 3, Edition 2: An Executive Compensation, Benefits & Human Resources Law Update

In this Issue:

- Don’t “Moench”ion It: Supreme Court Rejects Presumption of Prudence for ESOP Fiduciaries

- Avoiding Claims of Excessive Fund Fees

- Risk of ERISA Class Actions Can Be Reduced by Use of Plan Arbitration Provisions

- Severance Pay Is Subject to FICA Taxes (With Limited Exceptions) — Quality Stores Makes It Official

Excerpt from Don’t “Moench”Ion It: Supreme Court Rejects Presumption Of Prudence For ESOP Fiduciaries:

On June 25, 2014, the U.S. Supreme Court in Fifth Third Bancorp v. Dudenhoeffer rejected the presumption of prudence theory that many employee stock ownership plan (ESOP) fiduciaries relied on when challenging a claim of breach of fiduciary duty. The Court also addressed a number of federal securities law issues that fiduciaries of public company ESOPs who have inside information must face and provided specific guidance for courts to consider with respect to the requirements for pleading an ERISA fiduciary breach of a fiduciary’s duty of prudence claim in connection with publicly traded employer stock drop cases. Employers sponsoring ESOPs and 401(k) plans with employer stock funds and plan fiduciaries should take heed of this “new world” set forth by the Court for analyzing an ESOP fiduciary’s breach of his fiduciary duty of prudence and determine whether to take any affirmative action in light of this new framework.

Please see full Newsletter below for more Information.

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Written by:


Pillsbury Winthrop Shaw Pittman LLP on:

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