After the 2nd
U.S. Circuit Court of Appeals agreed with a lower court’s decision that
participants in Lehman Brothers’ retirement plan did not plausibly argue that
the company breached its fiduciary duty by keeping company stock in the plan when
it was not prudent to do so, the Supreme Court now says it will not review the
appellate ruling.
An updated
docket sheet on the SCOTUS website confirms the high court will not offer
another review to the long-running case. This lets stand a lower court ruling that effectively rejected plaintiffs’ arguments that fiduciary breaches had occurred.
By way of background, in 2013, the 2nd U.S. Circuit Court of
Appeals upheld an earlier ruling by the U.S. District Court for the Southern
District of New York to dismiss this case, Rinehart
v. Akers. That ruling was based on the presumption of prudence established
in a 1995 decision in Moench v. Robertson.
However, following the U.S. Supreme Court’s decision in Fifth
Third v. Dudenhoeffer, invalidating the presumption of prudence, the
Supreme Court retroactively sent current case back to the 2nd Circuit, which then
sent the case back to the district court.
Subsequent to a district court ruling and appeal, the appellate court noted that, while the
Supreme Court made clear in Fifth Third
that there should be no special presumption of prudence for employee stock
ownership plan (ESOP) fiduciaries, “allegations that a fiduciary should have
recognized from publicly available information alone that the market was over-
or under-valuing stock are implausible as a general rule, at least in the
absence of special circumstances.” In addition, for claims alleging a fiduciary
breach based on non-public information, the high court held that plaintiffs
must plausibly allege an alternative action fiduciaries could have taken and
would not have viewed as more harmful to the plan than helpful.
As in the courts’ earlier decisions, the 2nd
Circuit rejected the plaintiffs’ argument that their case included “special
circumstances,” pointing to Securities and Exchange Commission (SEC) orders
issued in July 2008 prohibiting the short-selling of securities of certain
financial institutions, including Lehman. The appellate court also rejected
the plaintiffs’ argument that had the retirement plan committee conducted an
appropriate independent investigation into the riskiness of Lehman stock, it
would have uncovered non-public information revealing the imprudence of
investing in the stock.
It seems that the final decision form the appellate court
was indeed sound, as the Supreme Court will let it stand.
By using this site you agree to our network wide Privacy Policy.
HealthSavingsAdministrators Launches
HSA Featuring Franklin Templeton Funds; Natixis ESG TDF on the
Horizon; Wilshire Associates Rolls Out Equity Hedge Fund Index; and more.
HealthSavings Administrators Launches HSA With Franklin Templeton Funds
The new health savings account (HSA)product by HealthSavings
Administrators will exclusively provide investors with access to 17 Franklin
Templeton Investments spanning asset classes and strategies. HealthSavings
says that upon opening an account, participants will be able to invest in one
or more of these funds via itsfirst-dollar investment program, which enables
accountholders to save for both current and future health care expenses without
large minimum balance requirements.
“In order to make the best decisions toward adequately and
efficiently saving for retirement health care expenses, investors need to
understand all available tools and options—and that includes HSAs,” says Kirk
Hoewisch, president of HealthSavings.
“Franklin Templeton’s expertise in offering investment strategies to help
investors save for retirement perfectly complements our retirement-focused HSA
program.”
Kevin Murphy, vice
president, senior retirement plan strategist believes the health savings
arena is in the early stages of undergoing a shift similar to the one in the
retirement space with the growing popularity of defined contribution (DC) plans.
“Helping
individuals achieve an optimal retirement outcome is at the core of our firm,” says
Murphy. “The HealthSavings HSA
featuring our funds is a great tool for individuals to leverage in working with
their financial adviser to prepare for their medical expenses in retirement.”
HSAs are designed
as long-term
investments vehicles in which money is reserved for eligible health care
expenses. It offers a “triple-tax” advantage of having money deposited tax free
or tax deductible, and remains tax free when used to pay or reimburse
for eligible medical expenses.
HealthSavings
works with FPS Trust Company as its custodian, and provides investment-focused
service through its cloud-based platform, the Investment Provider Xchange. To
learn more, visit HealthSavings.com.
NEXT:Natixis ESG TDF on the Horizon
Natixis ESG TDF on
the Horizon
Natixis Global Asset Management has filed a registration
statement with the Securities and Exchange Commission (SEC) to register a series
of target-date mutual funds in the U.S. focusing on a sustainable investing
approach.
The Natixis Sustainable Future Funds are designed to include
ten funds with vintages ranging every five years from 2015 to 2060. These funds
will select securities based on positive environmental, social and governance (ESG) criteria with
respect to such issues as fair labor, anti-corruption, human rights, fair
business practices and mitigation of environmental impact, the firm notes.
Natixis research points to a growing preference for
investing in companies with favorable ESG track records. Most respondents to
the firm’s 2016 Global Survey of Individual Investors stressed the importance
of investing in companies that are ethically run (83%), have a positive social
impact (70%) and good environmental records (70%). In addition, the Natixis
2016 Retirement Plan Participant Studyfound that especially
Millennials favor ESG investing,
with 71% of this age group reporting they would be more willing to contribute
to their retirement plan if they knew their contributions were also encouraging
sustainable efforts.
“Many Americans are challenged to save enough for
retirement, especially younger workers without company pensions who fear that
Social Security won’t be available when they retire,” says Ed Farrington,
Natixis’ executive vice president for retirement strategies. “Comprehensive
retirement plans that offer a wider range of choices, especially investments
that reflect workers’ values and beliefs, encourage an increased level of
saving that would help investors reach their retirement goals.”
The proposed funds would be advised by NGAM Advisors, L.P.
and sub-advised by Natixis Asset Management U.S.
Among other investment constituents, the funds will
incorporate equity and fixed income allocations that leverage the ESG expertise
of Mirova, an affiliate of Natixis AM U.S., which has managed responsible
investment solutions for almost 30 years. Natixis also has selected Wilshire
Associates Incorporated as a sub-adviser to provide glide path design and
portfolio allocation services.
The funds are expected to launch in the first quarter 2017.
A registration
statement relating to these target date funds has been filed with the SEC but
has not yet become effective, and the fund’s prospectus may change.
NEXT: Wilshire
Associates Rolls Out Equity Hedge Fund Index
Wilshire Associates
Rolls Out Equity Hedge Fund Index
Wilshire Associates has added a new index to its “Powered by
Wilshire” lineup. The BRI Long/Short Equity Index. Created and owned by BRI
Partners and calculated by Wilshire, the index is designed to provide a beta
benchmark for active long/short U.S equity hedge fund strategies.
Wilshire reports this index uses a systematic, rules-based
approach to create a dynamically hedged portfolio of equities delivering the
same risk/return profile as long/short equity hedge funds. It leverages
multiple selection criteria metrics such as value, growth and volatility to
identify large-cap and mid-cap equities for index inclusion. The long portion
of the index is then dynamically hedged using broad-based equity futures.
“Wilshire Analytics is thrilled to help fuel yet another Powered by Wilshire
index offering from BRI,” says Robert J. Waid, managing director at Wilshire
Associates. “Wilshire’s calculation and analytical expertise combined with
BRI’s innovative, proprietary systematic indexes demonstrate the value of a
Powered by Wilshire approach which can help clients bring new investment
benchmark strategy ideas to market quickly.”
BRI founder Adam Brass adds, “We have a singular objective:
to create a family of indexes that aim to measure the beta of alternative
strategies more cost-effectively and efficiently. We are proud to leverage
Wilshire’s deep index calculation and analytical expertise to bring to
investors the first of a next generation of indexes in this area. Each index is
designed to be low-cost, transparent, scalable and liquid. Our indexes make it
easier to quantify and demystify hedge fund strategies. They allow investors to
reliably measure alternative strategy beta against which to measure active
hedge fund managers. The timing could not be better.”
For more information about the BRI index, visit wilshire.com.
The Asset
Management Exchange (AMX) by Willis Towers Watson is an institutional asset
management marketplace where asset owners can invest in external asset
managers. Through a centralized back office and standardized fund
infrastructure that bypasses the investment industry’s cost and resource
duplication, the exchange will aim to give asset managers access to capital
while cutting overall value leakage.
Willis
Towers Watson says it also will deliver scale benefits to both sides of the
market while increasing transparency and asset owner control.
“In
the last 20 years, our lives have been transformed by innovation. Technology is
breaking down barriers and challenging the inefficiencies that have burdened
many industries for far too long,” says John Haley, CEO of Willis Towers
Watson. “The resulting marketplaces tend to be fairer, quicker and more
transparent. They give buyers better choice and control, open up new customers
for sellers and can rapidly become global in nature. We recognize the power of
this trend and are backing AMX to be a catalyst for change in institutional
investment.”
AMX
first will launch in the U.K. and will initially focus on providing
cost-effective and simpler access to hedge fund strategies, with additional
asset classes following later in the year.
The firm notes AMX is designed to centralize the
investment process through reduced
duplication of cost, resources and time; economies of scale in relationships
with other service providers, such as market counterparties, clearers and prime
brokers; standardized
legal documentation; timelier
and more accurate reporting through centralized data; and reduced
complexity via standardized infrastructure and a centralized back office.