PLANSPONSOR - February/March 2020 - 15
ROCESS
C for aASE
Litigation
is an everpresent
threat,
but sponsors
can lessen
their plan's
exposure
" Y
ou can't stop a participant from filing a lawsuit, " says Jeff Banish, a partner
in law firm Troutman Sanders LLP in Atlanta and an expert on plan governance.
He is one of four Employee Retirement Income Security Act (ERISA)
attorneys interviewed for this story who focus on advising plan sponsors on fiduciary best
practices. " As long as there are losses in the market, there are going to be lawsuits. Plaintiffs
continue to bring suits against fiduciaries of 401(k) and 403(b) retirement plans, alleging
imprudent investments and excessive fees for service providers and plan investments. " And,
as he says, " The best thing you can do is to build your structural defenses against it now. "
Committees can protect themselves by establishing and following plan governance
best practices, including processes for meeting regularly and monitoring investment
performance and service providers' fees, Banish says. " If an employer does that, many
other things will fall into place, " he says.
He points to the dismissal of lawsuits such as the White v. Chevron Corp. 401(k) excessive
fee case as indicative of how following and documenting prudent processes can lead
to successful legal outcomes for fiduciaries. In November 2018, a three-judge panel of the
9th Circuit Court of Appeals upheld the dismissal of plaintiffs' claims in the White litigation,
he says. While the plaintiffs petitioned the U.S. Supreme Court to review the case,
that court declined to do so, he adds. " These cases demonstrate that if you can show things
such as, 'Look, we benchmarked fees regularly and did RFPs [requests for proposals],' that
can carry the day. "
Sources pointed to these four steps to good governance that committees can follow-
and use as a good defense:
Consider active management carefully. This past October, a judge dismissed a lawsuit
against Morgan Stanley-Patterson v. Morgan Stanley. The suit alleged that fiduciaries of
the firm's 401(k) plan incorporated high-priced and underperforming investment options
into the menu, including using actively managed funds instead of index funds in some
asset classes.
" The court said, 'You're not comparing apples to apples,' " Banish says. The judge
found that the plan's fiduciaries had sound processes in making the investment menu
Art by Brad Holland PLANSPONSOR.COM February - March 2020 15
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PLANSPONSOR - February/March 2020
Table of Contents for the Digital Edition of PLANSPONSOR - February/March 2020
The Case for a Process
2020 PLANSPONSOR Best in Class 401(k) Plans
A Changed Perspective
Seize the Opportunity
Ready As It Goes
Income Insight
Good Read
PLANSPONSOR - February/March 2020 - Cover1
PLANSPONSOR - February/March 2020 - Cover2
PLANSPONSOR - February/March 2020 - 1
PLANSPONSOR - February/March 2020 - 2
PLANSPONSOR - February/March 2020 - 3
PLANSPONSOR - February/March 2020 - 4
PLANSPONSOR - February/March 2020 - 5
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PLANSPONSOR - February/March 2020 - 11
PLANSPONSOR - February/March 2020 - 12
PLANSPONSOR - February/March 2020 - 13
PLANSPONSOR - February/March 2020 - The Case for a Process
PLANSPONSOR - February/March 2020 - 15
PLANSPONSOR - February/March 2020 - 16
PLANSPONSOR - February/March 2020 - 17
PLANSPONSOR - February/March 2020 - 18
PLANSPONSOR - February/March 2020 - 19
PLANSPONSOR - February/March 2020 - 2020 PLANSPONSOR Best in Class 401(k) Plans
PLANSPONSOR - February/March 2020 - 21
PLANSPONSOR - February/March 2020 - 22
PLANSPONSOR - February/March 2020 - 23
PLANSPONSOR - February/March 2020 - 24
PLANSPONSOR - February/March 2020 - 25
PLANSPONSOR - February/March 2020 - 26
PLANSPONSOR - February/March 2020 - 27
PLANSPONSOR - February/March 2020 - 28
PLANSPONSOR - February/March 2020 - 29
PLANSPONSOR - February/March 2020 - A Changed Perspective
PLANSPONSOR - February/March 2020 - 31
PLANSPONSOR - February/March 2020 - 32
PLANSPONSOR - February/March 2020 - 33
PLANSPONSOR - February/March 2020 - Seize the Opportunity
PLANSPONSOR - February/March 2020 - 35
PLANSPONSOR - February/March 2020 - Ready As It Goes
PLANSPONSOR - February/March 2020 - 37
PLANSPONSOR - February/March 2020 - Income Insight
PLANSPONSOR - February/March 2020 - 39
PLANSPONSOR - February/March 2020 - Good Read
PLANSPONSOR - February/March 2020 - 41
PLANSPONSOR - February/March 2020 - 42
PLANSPONSOR - February/March 2020 - 43
PLANSPONSOR - February/March 2020 - 44
PLANSPONSOR - February/March 2020 - 45
PLANSPONSOR - February/March 2020 - 46
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PLANSPONSOR - February/March 2020 - 48
PLANSPONSOR - February/March 2020 - Cover3
PLANSPONSOR - February/March 2020 - Cover4
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