This installment of ERISA Tips discusses liability for fiduciary breaches and a blog entry that addresses the consequences of that liability and how it may arise.
Under ERISA, fiduciaries that have been found to have breached their fiduciary duties are personally liable for them, reminds Jose Jara in In “ERISA Fiduciary Insurance,” a Lexis Practice Note. He notes that fiduciaries that are personally liable for breaches must make the plan whole for any losses that resulted from the breach, as well as return to the plan any profits they made by using plan assets. In addition, Jara warns, joint and several liability may be the consequence for multiple fiduciaries who are determined to have been responsible for a breach of fiduciary duties, and in some cases, for even a co-fiduciary that has not breached fiduciary duties but whose other co-fiduciary has.
Jara offers a refresher on what can result in fiduciary liability, noting that among the reasons it can arise are:
- Selecting or retaining imprudent investments
- Transactions that entail conflict of interest
- Not paying a participant the benefits he or she is due
- Self-dealing
- Actions of any agent a fiduciary hires
Jara warns that ERISA fiduciaries are exposed more and more to liability in making decisions concerning ERISA employee benefit plans. And, he says, given that risk, some are considering financial protection from liability under ERISA.
Editor’s Note: ERISA Tips is a feature provided with you in mind — to make the newsletter more useful to you! If you have any content for ERISA Tips or the 403(b) Advisor that you would like to contribute or suggest, please contact John Iekel, editor of the 403(b) Advisor, at [email protected].
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