ERISA Stock Drop Suits & the 404(c) Safe Harbor Defense

Defending Stock Drop Cases Amid Differing Court Standards

Recording of a 90-minute premium CLE webinar with Q&A

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Conducted on Wednesday, August 18, 2010

Recorded event now available

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Course Materials

This CLE course will provide counsel to ERISA plans with a thorough update on case law developments in stock drop litigation. The panel will review the scope of the 404(c) safe harbor defense and offer litigation strategies to defend stock drop suits.


Several years into a wave of ERISA stock drop litigation, a body of law is developing. Though suits have largely been decided in favor of companies, the state of the law is far from settled. The DOL is aggressively arguing for courts to give less deference to a plan investment in company stock.

Most circuits have adopted the Moench presumption of prudence, but there are varying applications. Courts appear more willing to apply the presumption at the pleadings stage, yet some courts have found Moench inapplicable in motions to dismiss.

In several stock drop cases, plaintiffs have successfully used Section 404(c)’s safe harbor protection for participant-directed investments. Several courts have adopted the DOL’s narrow view of the scope of that protection. A number of courts, however, have disagreed with DOL’s position.

Listen as our authoritative panel of ERISA attorneys discusses the latest developments in stock drop litigation and strategies for defending these claims, including the use of Section 404(c) safe harbor protection as a defensive shield.



  1. Defense of stock drop cases
    1. Moench presumption of prudence
      1. Scope of the presumption
      2. Rebutting the presumption
      3. Application of presumption at pleadings stage
    2. Misrepresentation claims and disclosure obligations
    3. DOL’s position in amicus briefs
    4. Directors and officers as fiduciaries
    5. Recent case rulings and settlements
  2. Section 404(c) safe harbor protection
    1. Scope of the protection
    2. Defense to stock drop litigation
    3. DOL’s narrow interpretation and amicus filing
    4. Design and operational requirements to qualify for the protection


The panel will review these and other key questions:

  • Under what circumstances does the Moench presumption apply at the pleadings stage?
  • What is the DOL's rationale for rejecting or limiting the Moench presumption in stock drop cases?
  • Does a plan fiduciary have a duty to override plan language that expressly provides for employer stock investments?
  • How has the Section 404(c) safe harbor protection been used in the defense of stock drop claims?
  • What are the design and operational requirements for a plan to qualify for 404(c)'s protection?


Myron D. Rumeld
Myron D. Rumeld


He supervises the bulk of the firm’s employee benefits plan litigation activities in the firm’s New York...  |  Read More

Brian T. Ortelere
Brian T. Ortelere

Morgan Lewis

Mr. Ortelere is a Partner in the New York and Philadelphia offices, and is Co-Chair of the ERISA Litigation Practice at...  |  Read More

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