Supreme Court hears ERISA case against Intel

Supreme Court hears ERISA case against Intel
The court's ruling could impact plan sponsors and how they communicate with participants.
DEC 05, 2019
The U.S. Supreme Court heard oral arguments Wednesday in a case that could have significant repercussions for retirement plan sponsors by expanding the time that plan participants have to bring lawsuits. Former Intel Corp. engineer Christopher Sulyma sued the company in 2015, claiming Intel violated the Employee Retirement Income Security Act by investing large portions of 401(k) plan assets in risky and high-cost hedge-fund and private-equity investments, resulting in significant losses for plan participants. [More: Supreme Court accepts 401(k) case about alternative investments in target-date funds] Intel argued that the lawsuit should be thrown out because Mr. Sulyma, who worked at Intel from 2010 to 2012, had access to electronic documents describing the investments for more than three years. The company said it sent emails with links to documents about the investments, and that investments were chosen to better diversify the plans' portfolios. But current ERISA law requires plan participants to sue sponsors within three years of having "actual knowledge" of a fiduciary violation. The court appeared skeptical of Intel's argument, according to Reuters. Instead, justices appeared to sympathize with Mr. Sulyma's claim that he was unaware of the alternative investments until 2015, the year he filed his case, because he did not read the documents. [Recommended Video: MassMutual's LaPiana: Creating better conversations with your clients] "Most people don't read them, or many," said conservative Justice Brett Kavanaugh. "So how do you have actual knowledge if you haven't read it?" Skepticism came from both ends of the political spectrum. Liberal Justice Ruth Bader Ginsburg added: "I must say, I don't read all the mailings that I get about my investments." While the justices' opinions appeared to be in line with a ruling by the U.S. Court of Appeals for the Ninth Circuit in Mr. Sulyma's favor, that doesn't mean the case is going to be a "slam dunk" for the plaintiff, said David Levine, a principle at Groom Law Group. At least, not yet. [More: 403(b) sponsors finding success beating back lawsuits] "No matter what you hear in oral arguments, don't bank on anything until the decisions come down because a lot can shift," said Mr. Levine, whose firm specializes in retirement plans but is not involved in this case. "I wouldn't rush to do any major changes right now just based on an oral argument." Beyond the impact on plan sponsors and how they communicate to participants, Mr. Levine said the decision could also change the knowledge standards for claims against individual retirement plan advisers. "Advisers get named as defendants as well … that's something to keep in mind. It's something core to their business," Mr. Levine said. "We'll have to see where it all lands, but this is something I think is a key discussion item." The Department of Labor has proposed a rule that would require defined-contribution plan sponsors to default participants into receiving retirement disclosures digitally instead of on paper, as has been the traditional route. Industry firms and groups say the rule isn't enough, should do more to accommodate existing and emerging digital technologies, and is still too reliant on paper.

Latest News

SEC charges Chicago-based investment adviser with overbilling clients more than $2.5M in fees
SEC charges Chicago-based investment adviser with overbilling clients more than $2.5M in fees

Eliseo Prisno, a former Merrill advisor, allegedly collected unapproved fees from Filipino clients by secretly accessing their accounts at two separate brokerages.

Apella Wealth comes to Washington with Independence Wealth Advisors
Apella Wealth comes to Washington with Independence Wealth Advisors

The Harford, Connecticut-based RIA is expanding into a new market in the mid-Atlantic region while crossing another billion-dollar milestone.

Citi's Sieg sees rich clients pivoting from US to UK
Citi's Sieg sees rich clients pivoting from US to UK

The Wall Street giant's global wealth head says affluent clients are shifting away from America amid growing fallout from President Donald Trump's hardline politics.

US employment report reactions: Overall better than expected, but concerns with underlying data
US employment report reactions: Overall better than expected, but concerns with underlying data

Chief economists, advisors, and chief investment officers share their reactions to the June US employment report.

Creative Planning's Peter Mallouk slams 'offensive' congressional stock trading
Creative Planning's Peter Mallouk slams 'offensive' congressional stock trading

"This shouldn’t be hard to ban, but neither party will do it. So offensive to the people they serve," RIA titan Peter Mallouk said in a post that referenced Nancy Pelosi's reported stock gains.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.