A recent article from Employee Benefit News outlined the potential impact of Tribble v. Edison International, a recent case that the Supreme Court has agreed to hear, on fiduciary liability. The plaintiffs in the case argue that the fiduciaries chose mutual funds with higher fees when cheaper alternatives were available. The key concern of the case is that these mutual funds were chosen more than six years prior to the plaintiffs’ suit, exceeding what would typically be the six-year ERISA statute of limitations. The plaintiffs would argue that because fiduciaries have a duty to continually monitor investments in the fund they should be able to hold the fiduciary accountable for the losses due to excessive fees despite the six year limitation on the initial decision to include the mutual funds with higher fees.
According to the article, if the Supreme Court rules in favor of the plaintiffs, plan fiduciaries’ exposure to liability would increase because plan participants could bring suit against plan fiduciaries for events that happened 10 or 15 years ago if they can prove there are lasting effects from the fiduciaries’ decisions. To reduce the liability to fiduciaries regarding the selection and monitoring of investments, it is recommended fiduciaries document the initial reasoning behind the selection of investments and document the monitoring process and evaluation of investments.
As plan fiduciaries, do you have records of why one investment was chosen over another? Are there records of annual investment evaluations and benchmarking?