The 5th U.S. Circuit Court of
Appeals has reaffirmed its previous dismissal of a class-action lawsuit
that arose from the decision by Verizon Communications in October 2012
to purchase a single premium group annuity contract from The Prudential
Insurance Company of America to settle approximately $7.4 billion of
Verizon’s pension plan liabilities.
The case includes two classes
of pension plan participants: those whose benefit liabilities were
transferred to Prudential and those whose liabilities remained in the
plan. The appellate court agreed with the dismissal of claims of the
non-transferee class by a district court because the class did not prove
individual harm and, therefore, lacked standing to sue.
Its
affirmance was driven, in part, by the determination that
plaintiff-appellant Edward Pundt lacked Article III standing to sue for
purported fiduciary misconduct pursuant to the Employee Retirement
Income Security Act (ERISA). Specifically, the 5th Circuit previously
held that “standing for defined-benefit plan participants requires
imminent risk of default by the plan, such that the participant’s
benefits are adversely affected,” and it noted that Pundt failed to
“allege the realization of risks which would create a likelihood of
direct injury to participants’ benefits” in this case. The court also
rejected Pundt’s argument that “he directly suffered constitutionally
cognizable injury through invasion of his . . . statutory rights [under
ERISA] to proper [p]lan management,” concluding that standing based on
invasion of a statutory right must still “aris[e] from de facto injury,
which is not alleged by a breach of fiduciary duty.”
Pundt then filed a petition for writ of certiorari in the United States Supreme Court. Subsequently, the Supreme Court decided Spokeo, Inc. v. Robins,
which clarified the relationship between concrete harm and statutory
violations for purposes of assessing Article III standing. After
deciding Spokeo, the Supreme Court granted Pundt’s petition for writ of certiorari, vacated the appellate court’s judgment in the case, and remanded the case for further consideration in light of Spokeo.
NEXT: Reviewing the Verizon case in light of Spokeo
In its new opinion, the appellate court noted that the Supreme Court reaffirmed in Spokeo that
violation of a procedural right granted by statute may in some
circumstances be a sufficiently concrete, albeit intangible, harm to
constitute injury-in-fact without an allegation of “any additional harm
beyond the one Congress has identified.” However, the Supreme Court also
took care to note that “Congress’[s] role in identifying and elevating
intangible harms does not mean that a plaintiff automatically satisfies
the injury-in-fact requirement whenever a statute grants a person a
statutory right and purports to authorize that person to sue to
vindicate that right.” Rather, “Article III standing requires a concrete
injury even in the context of a statutory violation.”
In Spokeo,
the Supreme Court held that a bare allegation of a Fair Credit
Reporting Act violation based on inaccurate reporting of consumer
information was insufficient to establish injury-in-fact, as “not all
inaccuracies cause harm or present any material risk of harm.” In the
same way, the 5th Circuit recognized that Pundt’s allegation of an
“invasion of [a] statutory right[] to proper [p]lan management” under
ERISA was not alone sufficient to create standing where there was no
allegation of a real risk that Pundt’s defined-benefit-plan payments
would be affected.
In short, because Pundt’s “concrete interest”
in the plan—his right to payment—was not alleged to be at risk from the
purported statutory deprivation, Pundt had not suffered an injury that
was sufficiently “concrete” to confer standing. “A bare allegation of
improper defined-benefit-plan management under ERISA, without
concomitant allegations that any defined benefits are even potentially
at risk, does not meet the dictates of Article III; concluding otherwise
would vitiate the Supreme Court’s explicit pronouncement that ‘Article
III standing requires a concrete injury even in the context of a
statutory violation,’” the appellate court wrote.
It reinstated and published its prior opinion.
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Risk Strategies, a privately-held national
insurance brokerage and risk management firm, has announced the acquisition of TSG Financial. The move
marks the firm’s first venture into offering wealth management and retirement
plan services as part of its employee benefits practice.
TSG
Financial is a full-service asset management and employee benefits firm. It
develops traditional group benefits programs for everything from health and
dental to long-and short-term disability insurance. The firm is led by its four partners:
Michael Waters, Paul Essner, Ben Chafitz, and Bryan Pendrick.
“We
believe that deep, real-world expertise makes even the most complex client
challenges easy to solve,” says John
Greenbaum, employee benefits national practice leader for Risk Strategies.
“TSG Financial fits this model. Its employee benefits business is highly
complementary to ours and brings to the table financial services capabilities,
such as 401(k) plans, that are a logical extension of our business
strategy.”
In the
home health care industry, TSG Financial provides organizations with
traditional group insurance programs and 401(k) plans for administrative
employees, home health aides and nursing staff.
“It’s
exciting to join forces with a national-scale firm noted for its technical
ability and expert knowledge,” says Michael
P. Waters, lead partner at TSG Financial. “Our client base will
certainly benefit from access to new, meaningful resources, while our
capabilities in wealth management will position Risk Strategies to expand its
offerings.”
NEXT: Sentinel Names New CEO
Sentinel Names New CEO
Sentinel Benefits &
Financial Group,
a provider of retirement planning and employee benefit solutions, has appointed
Samuel Mitchell as its chief executive officer.
Mitchell began his career at Sentinel more than 16 years ago, holding various
roles within the organization. Most recently, he served as president of
Sentinel Benefits Group, the organization’s largest business unit.
In his
new role as CEO, Mitchell will be tasked with leading Sentinel’s four separate
business units, with a strong focus on its short and long-term growth
initiatives.
“We are
thankful for Sam’s steady hand and disciplined approach,” says Jim Carnevale, president of Sentinel
Pension Advisors. “We look forward to his leadership as we continue to meet
our clients’ needs through our extensive resources and capabilities. My brother
John Carnevale, our former CEO, provided us with a vision for the future of
retirement planning and employee benefits and how legislation and technology
will impact our business. We believe Sam shares many of these same visions
and this further validates him as the right choice.”
Sentinel
Benefits & Financial Group is a benefits and financial adviser to more than
3,000 businesses and individuals throughout the United States. The firm offers
aviary of services including comprehensive retirement plans, group health
insurance, reimbursement accounts, and financial planning.
NEXT:AXA Promotes New Divisional VP
AXA Promotes New Divisional VP
AXA, a financial protection
company, has appointed Fred Makonnen
to the role of divisional vice president.
He will be tasked with broadening AXA’s national focus in the tax-exempt retirement
plan market, while leading a national sales team responsible for expanding
business development and sales opportunities.
Makonnen
joined AXA’s Retirement Plan Services team in 2013 as regional vice president
and led market growth in the central region comprising Texas, Arkansas,
Louisiana, Mississippi, Ohio, Kentucky and Indiana.
“We’re
looking forward to Fred expanding on his central region success across our
nationwide footprint,” says Matt
Drummond, head of tax-exempt sales and business development. “His success
so far has translated to more Americans feeling that they’ve prepared
adequately so that they might enjoy a dignified retirement.”
Prior
to joining AXA, Makonnen spent 12 years in various senior sales management
positions within ING/Voya, including vice president of institutional sales,
where he was responsible for large group acquisitions in the health, education,
and government space. Also while at ING/Voya, Makonnen headed African American
Multicultural Sales & Marketing, where he was responsible for developing
education and communication materials for various underserved markets.
Makonnen
holds a bachelor’s degree in business administration from the University of
Connecticut. He also holds the Series 7, 66 and 24 securities industry
registrations administered by the Financial Industry Regulatory Authority
(FINRA).
NEXT: Crowell & Moring Hire
Employee Benefits Attorney
Crowell & Moring Hire
Employee Benefits Attorney
Crowell & Moring LLP announced David McFarlane will join the firm as a partner in the firm’s Corporate, Health, Care, Tax, and Labor &
Employment groups based in its Los Angeles office.
With
more than 20 years of experience, McFarlane has advised on pensions, employee
benefits, executive compensation, national and international corporate
transactions, and structured finance geared towards the Employee Retirement
Income Security Act (ERISA) and the Affordable Care Act (ACA). He is a founder
of Health Care Attorneys, P.C., a law firm dedicated to health care reform
under the ACA, and has previously worked with Willis Towers Watson, Osler,
Hoskin & Harcourt and Skadden Arps Slate Meagher & Flom.
Additionally,
McFarlane has authored two books on employee benefits law.
“David’s
extensive corporate experience in health care reform law, ERISA, ACA and
employee benefits will be invaluable to the firm’s clients and prospective
clients,” says James R. Stuart, co-chair
of Crowell & Moring’s Corporate Group.
NEXT:Integrated Retirement Partners with Advaney Associates, LLC
Integrated Retirement Partners
with Advaney Associates, LLC
Integrated Retirement, a provider of retirement plan
content and training, has expanded its team by uniting with Advaney Associates, a firm specializing in investment
and retirement communications. Owner
Patricia Advaney holds more than 25 years of industry experience, with 15
of those years held at Transamerica Retirement Solutions.
At
Transamerica, Advaney served several senior roles in Investments, Marketing and
Participant Experience, lead participant-focused strategies and oversaw digital
participant initiatives and tools made for sponsors to monitor their plans’
success.
The
partnership will focus on presentation development and communications toward
retirement plan participants.
“Given
our traditional focus on adviser, sponsor, and internal call center and
compliance staff audiences, the relationship with Advaney Associates is a great
complement to our existing scope of services,” says Pam O’Rourke, senior vice president and managing principal of training
and content services at integrated retirement. “So to all those clients who
have in the past asked us for participant communications, we’re now able to say
‘Yes, we can!’ Pat understands the participant mindset and knows how to create
content that is both meaningful and engaging.”
NEXT: PSCA Announces New
Directors
PSCA Announces New Directors
Two new
leaders will join The Plan Sponsor
Council of America (PSCA) Board of Directors, the organization announced.
Following an approval by the PSCA’s general membership, Ted Moss and Tim Kohn have been appointed to fill two vacancies on
the board.
Moss is
president of Roscoe Moss Company, a Los Angeles water industry manufacturer. He
is also a former board member who is returning for a new three-year term. He
represents the viewpoints of business owners and the critical role they play in
providing employee retirement plans.
Kohn is
vice president of Dimensional Fund Advisors of Austin, an investment management
firm. He leads the firm’s U.S. defined contribution (DC) practice. He is
committed to the work-based approach to voluntary retirement savings, and has
been an unwavering supporter of PSCA and its member organizations for many
years, the PSCA says.
“We are pleased to add these
outstanding business leaders to our board,” says Steve McCaffrey, PSCA’s board chairman. “We are so fortunate that
they are willing to help us advance our strategic initiatives, and serve the
interests of the nation’s retirement plan sponsors and participants.”
The PSCA is a community of employee-benefit plan sponsors, working
together on behalf of more than six million employees to expand on the success of
the employer-sponsored retirement system. The organization also serves as a
resource to policymakers, the media and other stakeholders in the retirement
industry.
NEXT: Morningstar
to Acquire PitchBook Data
Morningstar to Acquire PitchBook
Data
Morningstar has announced that it will
acquire PitchBook, a firm providing
data, research and technology covering private capital markets including
venture capital, private equity, and mergers and acquisitions.
The
company's PitchBook Platform and best-in-class user interface allow clients to
access data, discover new connections, and conduct research on potential
investment opportunities. PitchBook covers the full lifecycle of venture
capital, private equity, and M&A; including the limited partners,
investment funds, and service providers involved. With the acquisition of
PitchBook, Morningstar will be able to apply its core data and software
capabilities to a new client segment: private and institutional investors.
Morningstar President Kunal
Kapoor, who has
served on the board of directors for PitchBook since 2012 and will become chief
executive officer of Morningstar effective January 1, 2017, says, "Both
Morningstar and PitchBook share the goal of bringing transparency to the
investment landscape, and PitchBook is in a great position to continue its
strong growth trajectory as private markets and private companies are areas of
rapidly growing investor interest. Data has always been Morningstar's sweet
spot, and we look forward to working with PitchBook to help investors and
advisers better understand and navigate this evolving area of the market. Over
time, we plan to add some of Morningstar's proprietary research capabilities to
this dataset, and we also see meaningful opportunities to expand the business
globally."
PitchBook
will maintain its brand and identity and will continue to be led by founder and
CEO John Gabbert.
"I
reached out to Morningstar as a potential investor seven years ago because I
admired the company's entrepreneurial spirit and innovative products," says
Gabbert. "Joining forces with Morningstar will help us enter into our next
stage of growth, including developing the next-generation version of our
award-winning data and software platform, investing in our world-class sales
and customer support functions, and expanding our business in Europe and Asia.
As investors increasingly broaden their horizons beyond traditional public
markets and investments, the multi-asset capabilities Morningstar is building
will become even more valuable."
Morningstar
was an early investor in PitchBook and currently owns approximately 20% of the
company. Morningstar expects to pay approximately $180 million (subject to
working capital adjustments) for the remaining ownership interest in a
transaction that values PitchBook at $225.0 million.
Subject
to customary closing conditions, the two companies expect the transaction to
close in the fourth quarter of 2016.