Supreme Court signals interest in 401(k) plan fiduciary case

Justices seek DOL comment on case involving share classes offered to plan participants

Mar 25, 2014 @ 9:04 am

By Hazel Bradford

supreme court, 401(k), fiduciary, share class, labor department
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(Bloomberg News)

The U.S. Supreme Court signaled its interest in deciding whether 401(k) plan fiduciaries can be in breach of their duties over investment choices.

The justices asked lawyers for the Labor Department and Justice Department to weigh in on Glenn Tibble et al. vs. Edison International et al. That request, announced Monday, is considered a strong indicator that the high court will take the case.

“This certainly increases the chances that the Supreme Court will hear this case,” said Thomas E. Clark Jr., chief compliance officer at FRA/PlanTools, a fiduciary consulting firm in Charlotte, N.C.

(See also: Schlichter in new 401(k) lawsuit.)

In March 2013, the 9th U.S. Circuit Court of Appeals in Pasadena, Calif., found that Edison International breached its fiduciary responsibilities by selecting retail-class shares in an investment fund, instead of lower-cost institutional-class shares. The case also raises other fiduciary issues, including statutes of limitations for filing such lawsuits and investment safe harbors.

Calls to Edison International were not returned at press time. As of Dec. 31, 2012, the Edison 401(k) Savings Plan, Rosemead, Calif., had $3.97 billion in assets.

On April 2, the Supreme Court will hear arguments in another fiduciary duty case, Fifth Third Bancorp, et al. vs. Dudenhoeffer, that could make it easier for participants to challenge employers when company stock loses value.

Hazel Bradford is a reporter at sister publication Pensions & Investments

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