Fiduciary Breach Lawsuits on the Rise

One of the greatest distinctions between pension and 401(k) plans is the different standards which exists between fiduciary standards.

In a pension plan, the groundbreaking ERISA legislation of 1973 held trustees and anyone else who had direct contact with pension plan participants funds and assets to a very high standard of guardianship.

That same very high standard is largely absent when it comes to 401(k) plans. I supplied some examples of how mutual fund shareholder money is widely wasted in useless marketing campaigns by mutual fund companies in other, earlier posts on this blog.

So given the severe recession and the failure of active management, prudent use of derivatives, transparency and investment results, its no surprise that the number of lawsuit filed by pension plan participants has increased.

However, a new study of over 2,400 ERISA cases filed between January 1, 2005, and August 31, 2008, found that almost all the cases cited a fiduciary violation as one of the main reasons for filing the lawsuit.

As cited in the Newsdash daily newsletter prepared by PlansSponsor.com, the study, the "ERISA Litigation Study - April 15, 2009" is a statistical overview of pension lawsuits by category, court, and case disposition, compiled by Pension Governance, Incorporated, and its PensionLitigationData.com partner, The Michel-Shaked Group.

The complete report is available here.