According to a March 30, 2011 regulatory update from attorneys at Goodwin Procter, ERISA litigation may increase as the result of U.S. Department of Labor ("DOL") efforts. Click to access "Regulatory Update – DOL Initiatives Potentially Affecting ERISA Litigation." For one thing, should the definition of fiduciary be expanded, more persons will have potential liability. The pushback from various segments of the financial services industry has been considerable, leading to an extension of the time allowed for official comments through April 12, 2011. A second hurdle to overcome emphasizes disclosure and takes the form of a final rule that goes into effect for plan years that start on or after November 1, 2011. Specifically, plan participants who are allowed to self-direct their investments must now be given granular performance and fee information about "designated investment alternatives," including identification of asset managers and arrangements and restrictions on brokerage accounts and participants' flexibility (or lack thereof) to give orders. A third new item on the growing ERISA compliance checklist, if adopted by the DOL, will force service providers to submit a written statement of what services it will offer to the retirement plan(s) and copious data about how it expects to be indirectly and directly compensated. I concur with the authors that more rules likely beget more lawsuits. Part of the current ills that the DOL seeks to cure is to make sure that a sufficient quantity and quality of information is available to decision-makers. Clearly, more and better datapoints can be helpful. Absent an inflow of information, what are decision-makers doing now to properly carry out their fiduciary duties? Understanding what is or is not being conveyed as billions of dollars are committed is of significant import in terms of good process. Note to Readers: Click to read the 469 page transcript of March 1, 2011 testimony on the topic of an expanded definition of ERISA fiduciary. Click to read the 387 page transcript of March 2, 2011 testimony on the topic of an expanded definition of ERISA fiduciary.
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