Trust Updates Archive
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(May 19, 2015 --Chicago, IL) -- An ERISA fiduciary is required to conduct a "regular review of its investment with the nature and timing of the review contingent on the circumstances." the U.S. Supreme Court ruled yesterday in Tibble v. Edison International. The ruling provides little guidance to fiduciaries on the scope of such reviews. It is a "stark" reminder to plan fiduciaries, say legal observers, to not rely on ERISA's safe harbor provisions for protection if the selection process for choosing and retaining investments is not thorough and well-documented. According to the high court, if an alleged breach of the "continuing duty" to review occurred within the six years of a lawsuit being filed, the case is timely. Legal observers say this could render ERISA's statute of limitations "meaningless and could even expose present fiduciaries to liability for decisions made decades ago." The ruling affirms the U.S. Department of Labor's position that the six-year statute of limitations runs from the last action or investment in a mutual fund, not from the time a fiduciary makes the decision to include the investment as a plan option. The Court declined to address the scope of "continuing" reviews. It remanded the case to the Ninth Circuit to determine if any reviews were "of the sort that a prudent fiduciary would have conducted absent a significant change in circumstances." Under trust law, according to the high court, a trustee has a continuing duty to monitor trust investments and remove imprudent ones. This continuing duty exists separate and apart from the trustee’s duty to exercise prudence in selecting investments at the outset. With respect to the scope of any ongoing review, the high court would only say an ERISA fiduciary must discharge his responsibilities “with the care, skill, prudence, and diligence” that a prudent person “acting in a like capacity and familiar with such matters” would use. "We express no view on the scope of respondents’ fiduciary duty in this case. We remand for the Ninth Circuit to consider petitioners’ claims that respondents breached their duties within the relevant 6-year period, recognizing the importance of analogous trust law," wrote Breyer. Tibble also alleged that revenue sharing arrangements amounted to prohibited transactions. To download a copy of the high court ruling Click here. For more detailed information see the upcoming issue of Trust Regulatory News. ************************************ DATA BOOKS Trust Performance Report -- annual data book, published in May, provides both industry and peer group performance data by assets, gross revenue, net income, and account category. Subscribers receive quarterly updates. TPR findings are based on its annual survey of the top 1500 fiduciary institutions. For more best practices and benchmark data see TPR. For information on ordering click here or the link below. Fiduciary Earnings & Expenses -- annual data book comparing performance among independent trust companies to that of OCC national trust companies and to bank trust divisions. For information on ordering click here or the link below. ******************** No statement in this issue is offered as or should be construed as legal opinion or advice or as an indicator of future performance. To subscribe to Trust Updates or for a trial subscription go to http://www.trustupdates.com/Subscribe/Free_and_Trial/ To unsubscribe to Trust Updates go to To subscribe, click on the link below : • Trust Regulatory News • Trust Performance Report or • Fiduciary Earnings & Expenses Subscription request can also be sent to "circulation@trustupdates.com" or by calling 800-404-2116. • 1992-2015 Copyright© A.M. Publishing, Inc., Trust Regulatory News |