PLANSPONSOR - December 2022-February 2023 - 6

RULES & REGULATIONS
401(k) investments.
The BlackRock suits brought by
Miller Shah have been panned by industry
actors and watchers as absurd and even of
bad faith. The arguments found in the
defendants' briefs and amicus briefs say
that Morningstar, which rates investment
products, considers the BlackRock TDFs
as the top-rated TDF series.
If the BlackRock series can be challenged,
say its supporters, then any plan
could be sued.
The attorneys representing Capital
One and Booz Allen Hamilton did not
return a request for comment. The
other nine suits brought by Miller Shah
concerning the BlackRock TDFs are
ongoing.
Principles for Big Banks to
Manage Climate Risk
The Federal Reserve recently published
proposed principles to manage climaterelated
risk for financial institutions with
more than $100 billion in assets managed.
The principles are like the principles
proposed by the Office of the Comptroller
of the Currency in December 2021 and the
Federal Deposit Insurance Corp. this past
March.
The proposed guidelines aim to
address physical and transition risks
associated with climate change. Physical
risk refers to natural phenomena such as
drought and storms that would increase
in frequency and/or intensity because of
climate change and could present physical
risk to assets held by large financial
institutions. Transition risk refers to " the
financial impacts of ... climate change and
the transition to a lower carbon economy, "
the Fed wrote.
The proposal defines the institutions
to which it would apply as including state
member banks, bank holding companies,
savings and loan holding companies,
foreign banking organizations with
respect to their U.S. operations and nonbank,
systemically important financial
institutions supervised by the Federal
The BlackRock suits brought
by Miller Shah have been
panned by industry actors
and watchers as absurd and
even of bad faith.
Reserve Board.
The principles advise that these institutions
make governance changes so
that board members are aware of the risk
and require management to consistently
report on it. They also advise incorporating
assessment into formal policies and procedures,
making climate risk part of the
overall business strategy and obtaining
access to relevant data.
This proposal follows a series of executive
agency proposals related to climate
risk. Not only have the OCC and FDIC
published similar ones, but the Securities
and Exchange Commission presented a
rule this past March that would require
climate-related disclosure from public
companies, including their direct greenhouse
gas emissions and the emissions
in their value chain. Congressional
Republicans have pushed back against
the SEC proposal in the form of legislation.
A companion bill was introduced by
Senate Republicans in September.
Judge Grants Motion to
Dismiss Ricoh Complaint
A federal district court chief judge has
rejected both fiduciary breach claims
brought this past February against Ricoh
USA by 401(k) retirement plan participants
under the Employee Retirement
Income Security Act.
The plaintiffs'
complaint
" fails
to
provide a reasonable inference that defendants
breached their fiduciary duty to
participants, " wrote Juan R. Sánchez,
chief judge of the U.S. District Court of
the Eastern District of Pennsylvania, who
was not convinced by the plaintiffs' arguments
that the defendants' conduct, as
401(k) plan sponsors, was imprudent or
in violation of ERISA.
" Plaintiffs fail to plausibly allege
that the committee breached its ERISAimposed
fiduciary duty by charging unreasonable
recordkeeping
fees, "
Sánchez
wrote.
" Plaintiffs also do not state a failure
to monitor claim against Ricoh and the
Board, since this second claim is derivative
of the first. Accordingly, defendants'
motion to dismiss will be granted. "
The motion to dismiss was granted
with leave to amend, which permits the
plaintiffs to rework the complaint and
refile one time to state a cause of action.
The current complaint fails because
it does not " provide meaningful benchmarks
by which the Court can assess
the prudency of defendants' actions, "
Sánchez wrote.
The plaintiffs' lawsuit alleged two
counts against the sponsor for breach of
fiduciary duty to participants and failure
to monitor plan fiduciaries. The plaintiffs
alleged in the complaint that the sponsor
failed to use its substantial bargaining
power, by virtue of its size, to negotiate
lower fees for investments, plan administration
and recordkeeping services.
A Ricoh spokesperson said in an
email that the company is pleased with
the court's ruling. " Ricoh USA Inc. takes
great care in the prudent management of
its retirement savings plan. " -PS
For in-depth coverage of these topics and more, go to PLANSPONSOR.com/compliance.
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PLANSPONSOR - December 2022-February 2023

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