Trust Updates Archive

20070508--TRN, BofA SLUSA Neuters Conversion Class Actions

(
October 3, 2007--Chicago, IL)--Common trust fund conversion class actions pose little future risk to fiduciaries unless plaintiffs' counsel can skirt the expansive reach of the Securities Litigation Uniform Standards Act of 1998 (SLUSA).

In the last few months, BoA, JPMorgan Chase, and Wachovia have all effectively used SLUSA to dismiss lawsuits that allege that the banks breached their fiduciary duty when investing trust funds in their proprietary mutual funds.

"The landscape in class actions is changing significantly," Mary Hackett, a commercial litigator with the law firm of Reed Smith, told attendees at a recent American Bar Association conference. "We're out of prudence [allegations] and into SLUSA." Reed Smith represents defendants in the BofA lawsuit.

However risks remain since SLUSA does not preempt ERISA, according to legal sources.

The recent settlement in Mehling v. New York Life leaves fiduciaries with no clear answers regarding best practices when investing assets (held in ERISA-governed accounts) in proprietary mutual funds.


For more on these topics, see the current issue of Trust Regulatory News.



No statement in this issue is offered as or should be
construed as legal opinion or advice
.

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