Deals & People November 12, 2008

RolloverSystems Creates New Marketing Director Position

RolloverSystems Inc. (RSI), an independent provider of rollover management services, named Christopher Silvaggi as its director of marketing and product.
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Silvaggi, who fills a newly created position, brings 15 years of experience in marketing, product development, and sales to RSI. Most recently he was director of marketing at Prudential Retirement, where he managed strategy, planning and analysis of participant programs.

At Prudential Retirement, Silvaggi managed the development of customer engagement strategies for retirement income products and customer experience lifecycle programs for new customer acquisition, portfolio management, and asset retention. He also developed, managed and analyzed results of campaigns to increase participant contributions and in-plan asset consolidation resulting in higher plan balances and improved participant retirement outcomes. Prior to that, Silvaggi worked for Royal Bank of Scotland as vice president of Online Marketing and was a member of the Smith Barney Private Client Group in New York, working in client experience management and product development.

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“As more advisers and plan sponsors recognize the advantages and risk reduction that comes from managing the rollover process within 401(k) plans, interest has grown in RSI’s capabilities,” said Chief Marketing Officer Jim Langenwalter in a press release. “In this new role, Chris will help us respond to that demand and develop our products over time so that we’re continually meeting our clients’ needs and the needs of their plan participants.”

RSI manages the rollover process for 401(k) plan sponsors, supporting participants by providing education on retirement options, access to an independent array of rollover options, and assistance with rollover, transfer or distribution processes through its Retirement Center.

Compliance November 12, 2008

No ERISA Breach Where Fees not Paid by Plan

A 401(k) plan sponsor did not engage in a prohibited transaction under § 406 of the Employee Retirement Income Security Act (ERISA) because investment manager fees were not paid using assets of the plan, a court has ruled.
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According to the opinion in the U.S. District Court for the Northern District of California, since fees for the plan’s investment manager were paid directly by the plan sponsor, there was neither a transaction with a “party in interest” that would be prohibited by ERISA § 406(a) nor a self-dealing transaction that would be prohibited by § 406(b). The opinion said that from inception through the date it was sold in 2006, Fremont Investment Advisors (FIA) was owned by what had been Bechtel Investments Inc., and during the relevant period, Stephen Bechtel Jr. owned a stake in FIA’s parent company.

The court also said “the evidence may suggest that Bechtel did not apprise the plan participants of the full extent of Bechtel’s interest in’ the investment manager, but the plaintiffs failed to produce evidence to support a finding that the plan fiduciaries took steps to conceal a breach of fiduciary duty or made knowing misrepresentations with the intent to defraud plan participants. The court also dismissed plaintiffs’ allegations the plan sponsor concealed excessive fees, misrepresented investment risk, failed to use proper benchmarks for some funds, and made misstatements about ERISA’s safe harbor defense.

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The plan participants also claimed Bechtel violated its fiduciary duty by maintaining imprudent investment options, but the court defended Bechtel’s offering of six different investment options at various levels of risk, saying the offering was customary for this type of defined contribution plan. In addition, according to the opinion, the evidence shows that Bechtel and plan fiduciaries regularly reviewed the performance of the plan’s investments and considered alternatives.

The court did however, move forward the claims relating to a four-month time period during the six years related to the lawsuit where the investment fees were paid by plan assets.

The case is Kanawai v. Bechtel Corp., N.D. Cal., No. C 06-05566 CRB, 11/3/08.

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