Trust Updates Archive
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ERISA--When to Question Investment Directives
(December 17, 2004, CHICAGO, IL)—In a move intended to lower the post-Enron
risks for directed trustee, the U.S. Department of Labor today issued a
guidance outlining the responsibilities of a directed trustee to question
investment directives.
Field Assistance Bulletin 2004-03 puts into writing the DOL’s position
that the named fiduciary, not the directed trustee, is primarily responsible
for ensuring the prudence of plan investment decisions.
Only in limited circumstances, says the DOL, is a “directed trustee
required to question the directing fiduciary’s instructions regarding transactions
involving publicly traded securities.”
The FAB specifically addresses the responsibilities of a directed trustee
in determining whether a direction is “proper” -- consistent with the terms
of the plan and not contrary to ERISA. For instance, when a directed trustee
has nonpublic information regarding a security, the directed trustee has
a duty to inquire whether the named fiduciary’s knowledge and review of
the security is sufficient to make a prudent decision. When a directed
trustee is aware of “clear and compelling public indicators,” questioning
the viability of the issuer of a security, it has a responsibility, in
turn, to question directions involving the purchase or holding of that
security.
For more information see the January issue of TRN. The FAB is available on the DOL’s website and by going to www.trustupdates.com/fab2004-3.pdf. -- Copyright ©2004 A.M. Publishing, Inc., Trust Regulatory News
No statement in this issue is offered as or should
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