Proprietary Funds in 401(k) and Retirement Plans: A View From the Trenches
Navigating Prohibited Transaction Rules, Fiduciary Duties, and the Recent Surge in DOL Investigations and Civil Litigation
Recording of a 90-minute CLE webinar with Q&A
Conducted on Wednesday, August 9, 2017
Recorded event now available
This CLE webinar will discuss the legal issues arising from the offering of proprietary or affiliated products in ERISA-covered retirement plans sponsored by financial services companies. The panel will discuss the rise in regulatory and litigation challenges to proprietary funds, and explain how plan sponsors and fiduciaries can avoid or mitigate the additional risk these offerings create.
Description
Financial services companies typically offer their own products—mutual funds, insurance contracts, collective trusts—to their employees in their company-sponsored 401(k) and retirement plans. These proprietary, or affiliated, products can create additional risks for sponsors and fiduciaries and raise complicated issues under ERISA’s prohibited transaction and fiduciary rules.
These complex issues have recently moved front and center in both the regulatory and litigation arenas as private plaintiffs and the government challenge the prudence and performance of these investments and associated fees and expenses. These challenges raise the specter of a finding of imprudence related to a sponsor’s own products that are marketed to the sponsor’s customers, an unenviable situation that can expose a plan sponsor to costly litigation or regulatory action.
Listen as our experienced panel of ERISA attorneys discusses the legal issues that can arise from the offering of proprietary or affiliated products in ERISA-covered retirement plans sponsored by financial services companies. The panel will discuss the rise in regulatory and litigation challenges to proprietary funds and explain how plan sponsors and fiduciaries can avoid or mitigate the additional risk these offerings create.
Outline
- Prohibited Transaction Exemption PTE 77-3 and the residual duties of prudence and loyalty
- Related problems of 12b-1 fees and sales commissions
- Problems with “seeding” newly established proprietary products
- DOL investigative initiative and the surge in class action complaints
- Strategies for reducing litigation risk
Benefits
The panel will review these and other key issues:
- What are the peculiar problems associated with the offering of proprietary funds, and the varied—and peculiar—legal standards governing their use?
- How might a finding of a fiduciary breach impact the sponsor’s business model?
- What steps can be taken to avoid problems before they erupt into a DOL investigation and/or an ERISA class action?
Faculty
Jeremy P. Blumenfeld, Partner
Morgan Lewis & Bockius,
Philadelphia
Mr. Blumenfeld represents defendants on a range of employee benefit litigation matters, including numerous ERISA class actions. Co-chair of the firm’s ERISA litigation practice, Jeremy’s experience includes defending class action claims challenging the administration of 401(k) savings plans, stock drop litigation involving 401(k) savings plans, cash balance and other defined benefit plans, and employee stock ownership plans (ESOPs) and traditional severance pay plans. He also advises clients on litigation and risk avoidance.
Brian T. Ortelere, Partner
Morgan Lewis & Bockius,
Philadelphia
Mr. Ortelere is a Partner in the New York and Philadelphia offices, and is Co-Chair of the ERISA Litigation Practice at Morgan Lewis. His practice covers the full range of employee benefit defense litigation matters, including every variety of ERISA class action. He has particular expertise in defending class claims challenging the administration of defined benefit pension plans, 401(k) and 403(b) savings plans and ESOPs, and has abundant experience in representing fiduciaries and plan service providers in governmental investigations related to benefit plans. Along with the ERISA Litigation Practice he co-chairs, Mr. Ortelere is ranked in the top three ERISA litigators nationwide by Chambers and Partners.
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Customer Reviews
The program was very helpful and gave me a good overview.
Lauren Piana
Odin, Feldman & Pittleman
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Patricia Killian
McCarter & English
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Williams Mullen
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Chartis Claims
Great overall summary of ERISA issues.
Shannon Awsumb
Anthony Ostlund Baer & Louwagie
Employment & ERISA Advisory Board
Special Counsel
Schulte Roth & Zabel
Partner
Holland & Hart
Director
Goulston & Storrs
Partner
Kelley Drye
Partner
Perkins Coie
Partner
Hoover Kernell
Shareholder
Littler Mendelson
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Wick Phillips
Partner
Shook Hardy & Bacon
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Greenberg Traurig
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Gibson Dunn & Crutcher
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Epstein Becker & Green
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Freeman Freeman Smiley
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Greenberg Traurig
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