May 21, 2015
On May 18, 2015, in Tibble v. Edison International, the U.S. Supreme Court unanimously held that under the Employee Retirement Income Security Act (ERISA), investment fiduciaries have a duty to continuously monitor previously chosen investments and remove those that are no longer prudent. The case involved Edison’s participant-directed §401(k) plan, and the primary issue was whether the plan’s investment fiduciaries had breached their duties by retaining mutual funds that charged retail fees when essentially identical funds charging lower institutional fees were available. The lower court had focused on the duty of prudent selection of investments and found in favor of Edison because the six-year statute of limitations on the investment selection had closed. The Supreme Court found that the duty in question was the separate duty to monitor previously selected investments and sent the case back to the lower court to determine whether the plan’s fiduciaries had breached the duty to monitor.
If you have any questions about the Tibble decision, please contact your Sibson consultant or send us a note.
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