PLANSPONSOR - September 2017 - 15

obligations and escape liability. However, the 5th U.S. Circuit
Court of Appeals found that the district court rejected these
arguments for good legal reasons, noting that no statute cited by
the objectors requires the county to levy taxes to fund hospital
pensions; it only provides that the county is authorized to do
so. " Neither Objectors nor this court has found definitive legal
authority holding a Mississippi county responsible for the debts
of its 'independent' entities, " the court's opinion says.
Federal Pensions Challenge Big Banks'
Securities Lending Practices
Three U.S. pension funds have filed a lawsuit against a group of
the world's biggest investment banks including Goldman Sachs,
J.P. Morgan, Credit Suisse, UBS and Bank of America, alleging
that the banks conspired to block competition in the securities
lending marketplace. According to the plaintiffs, the banks have
created and fostered the opacity of the marketplace in order to
prevent borrowers and lenders from working together directly
and to thereby protect and maximize their own interests as
brokers of securities lending arrangements. In doing this, they
have allegedly worked together behind the scenes to fend off
previous attempts by clients and competitors to make the market
more efficient, plaintiffs said. As is noted in the complaint, today
there are approximately $1.72 trillion worth of securities on loan,
and this has become a critical part of the wider financial marketplace.
In the federal court system, to establish that a complaint
can succeed as a class action, plaintiffs must prove numerosity,
commonalty and typicality. Because these stock-lending transactions
are all structured and papered somewhat differently,
experts say it may be particularly challenging for the plaintiffs
to prove typicality.
EEOC Wellness-Program-Rule Lawsuit
Decided in Favor of AARP
A decision out of the U.S. District Court for the District of
Columbia rules in favor of the AARP's challenge to two regulations
promulgated by the U.S. Equal Employment Opportunity
Commission (EEOC) that are related to incentives and employersponsored
wellness programs. Crucially, the court has determined:
" It is far from clear that it would be possible to restore
the status quo ante if the rules were vacated; rather, it may well
end up punishing those firms-and employees-who acted
in reliance on the rules. " As a result, the court has not vacated
the rules but instead " remanded " them to the EEOC for reform
and elucidation. The initial complaint alleged that the EEOC's
final wellness program rules, implemented at the beginning
of this year under the Americans with Disabilities Act (ADA)
and the Genetic Information Nondiscrimination Act (GINA),
are arbitrary, capricious, an abuse of discretion and not in accordance
with law. Explaining its decision, the court pointed out
that the " central issue here results from the tension that exists
between the laudable goals behind such wellness programs and
the equally important interests promoted by the Americans with
Disabilities Act and the Genetic Information Nondiscrimination
Act. EEOC is tasked with reconciling these competing concerns,
and this case arises out of its most recent attempt to do so. "
Extension of Fiduciary Rule
Transition Period
A " notice of administrative action " submitted by Department of
Labor (DOL) attorneys to the U.S. District Court for the District
of Minnesota indicates that the regulator will extend the transition
period preceding full implementation of the expanded fiduciary
rule. This is the venue in which one of the many examples
of anti-fiduciary rule litigation is still pending, in this case the
suit filed by Thrivent Financial. The filing from the DOL does
not, itself, contain the substantial detail that will presumably be
included in the paperwork the regulator says it has submitted to
the Office of Management and Budget (OMB).
Sanctions Bill Affects Retirement Plans
On August 2, President Donald Trump signed the Countering
America's Adversaries Through Sanctions Act. " Many ERISA
and governmental benefit plans may view trade sanctions as
something that applies to banks but that doesn't impact our
retirement system. This view is wrong, " attorneys with Groom
Law Group wrote in a Benefits Brief. Over the next few months,
Groom says, the U.S. Treasury's Office of Foreign Assets Control
(OFAC) will issue guidance implementing the changes set
out in the sanctions bill. The attorneys say they have seen an
increase in the number of pension plans that have faced possible
OFAC violations arising from distributions and investments.
According to the benefits brief, OFAC maintains a list of individuals
and entities that are sanctioned on three lists, the Specially
Designated Nationals List (SDN List), the Foreign Sanctions
Evaders List (FSE List), and the Sectoral Sanctions List (SS List).
To assist with compliance, OFAC offers an online search tool that
allows users to compare names against the SDN and FSE Lists.
Groom attorneys suggest Employee Retirement Income Security
Act (ERISA) and governmental benefit plans develop a compliance
program and enter into contracts with service providers to
assist with compliance. Plans should examine (and continue to
monitor) existing contracts and participant and beneficiary lists
to ensure that the payments the plan is making (and investments
and transactions the plan is making) are permitted. -PS
For in-depth coverage of these topics and more go to plansponsor.com/compliance.
PLANSPONSOR.com September 2017 15
http://www.plansponsor.com/compliance http://www.PLANSPONSOR.com
PLANSPONSOR - September 2017

Table of Contents for the Digital Edition of PLANSPONSOR - September 2017
