ERISA Litigation: Q&A with Speaker Stephen Rosenberg

824L16_header   Stephen Rosenberg, Of Counsel, The Wagner Law Group will be speaking at our October 26th-27 ERISA Litigation Forum in New York City. In anticipation of next month’s conference, check out our recent Q&A with Stephen –

1. What is the greatest implication of the recent Tibble case for your practice?

Tibble’s greatest implication has nothing to do directly with excessive fee issues, but instead concerns the fact that it has greatly clarified the application of ERISA’s six year statute of limitations for breach of fiduciary duty claims.  Interestingly, a good case can be made – and I have made it on my blog – that the Supreme Court really added nothing new, in a concrete sense, to this area of the law, in that the decision did not present a clear rule of law as to the starting and ending points of that statute of limitations, or of the test to use to determine each.  However, by treating the statute of limitations as straight forward and as running from the breach identified by the plaintiff, and not from some other point in time, the Court in Tibble effectively undercut many of the more creative applications of that statute of limitations that lawyers – both for plaintiffs and defendants – have been using on a regular basis in the courtroom, and made it easier for all involved to work from a common understanding of when the statute of limitations begins to run.

2. How will the DOL’s new rules defining fiduciary status, the conflicts of interest rule and investment advice change the way you do business?

On the level of providing concrete and specific legal advice to clients, it will obviously affect what we tell clients they need to do under various circumstances to be in compliance with any revised rules.  It will certainly affect us in how we tell clients to order their operations.  However, on a deeper level, it won’t change much at all about the way we do business from a philosophical perspective.  We have always wanted to work with clients and continue to work with clients who seek to provide financial and plan services at the highest and most ethical level possible.  These changes will simply alter the bar they, and we, have to meet to maintain those standards.  We have always been focused on that, though, and so, from that perspective, it won’t change the way we do business.

3. What steps should employers be taking to review plan documents in light of recent Supreme Court cases like Burwell and Obergefell?

In a way, this question brings us back around to one of the central lessons of the Tibble case, which was the  need to monitor, monitor and monitor some more the operations of a plan.  In the case of Tibble, that lesson concerned monitoring the nature of plan investment choices.  Here, though, the same issue carries over: once again, it is about the need to go back and review the plan to determine what must be revised or whether, instead, plan terms can be left as is.  In this instance, the review is, of course, to make sure that any changes are made that are required as a result of those decisions. In  terms of steps, what employers need to do is, if they are large enough to have an in-house legal function, educate themselves on the decisions and how they are being viewed in the context of plan benefits, so that they can have thoughtful discussions about these issues with their outside lawyers.  Then, they need to take that next step, of reviewing their plan terms and operations with outside benefit and ERISA lawyers to determine whether their plan documents or operations need to be revised or updated in any manner.

4. How concerned should we be about the SEC revamping its focus on registered investment advisers and broker/dealers selling investment products to retail investors and retirement savers?

Like everything, this is something that has potentially positive as well as negative consequences.  On the positive side,  any and all regulatory or enforcement efforts that are directed toward protecting retirement investors, especially retail investors who tend to lack financial expertise, is a plus.  This group also includes elderly investors, who are vulnerable not only because of a lack of expertise on financial matters but because the elderly are frequently the target of fraudulent scams.  So, the SEC (and related FINRA) efforts to provide more guidance and to increase enforcement is a good thing.   The counterpoints reflect the lack of a uniform standard of care – in other words, the overlay of sometimes competing regulatory regimes (DOL, SEC, FINRA, OCC for Banks, Federal Trade Commission) creates some confusion, and potentially some gaps, in coverage.  It also adds layers of compliance and related costs  to the industry, which is fiercely debated and not easily accepted.  In and of itself, there is little sympathy for the fact that the industry might have to bear costs like this that are intended for a good purpose.  After all, everyone assumes “Wall Street” prints money for itself.  However, if the net result is that financial advisors leave the market (and thus are not serving the protected class of retail investor) due to costs, complexity of compliance, potential fiduciary liability, or the like, then the stated objective of providing more financial literacy and competence to the retail investment sector of the retirement world is defeated.

5. What steps can advisers take to ensure that their plan sponsors are protected from substantial personal liability?

First, advisors can make sure they do their jobs right. If the advisers’ work for the plan is being done prudently, honestly, and in the best interest of plan participants, then the adviser has gone a long way towards ensuring that the plan sponsor will not face liability.  Second, advisors can directly and expressly assume fiduciary status, taking on the liability risks for themselves and thus, to a large extent, insulating the plan sponsor.  Third, one of the largest problems from a litigation perspective for plan sponsors is that they often assume that their advisers have fiduciary status, which is not always the case.  Either purposely taking on fiduciary status or instead expressly disclaiming it, so that the plan sponsor will know and understand which is the case, would go far toward protecting plan sponsors. 824L16_header   When: Monday, October 26 to Tuesday, October 27, 2015 Where: Hilton New York City – Times Square, NYC Learn More:

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