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the supreme court and the evil or stupid fiduciary
Now you're getting close to the interesting part of the case. Derf is right - the piper gets paid one way or the other.
Some of what's at issue here is whether the employer could have the employees pay. The plan docs say no, but the docs also give employer the responsibility to interpret what "employer pays fees" means.
So, if employees pay implicitly (via higher retail fund fees and a kickback to the plan operator), does that violate the terms of the plan?
The employer is obviously taking the position that the requirement that the employer pay the fees refers only to explicit fees; those fees that are billed directly to the employer.
The case is not so much about retail vs. institutional class shares.
Where is all the outrage with Vanguard using investor class shares in its target date funds? Same idea - Vanguard doesn't charge the investor a management fee for those funds; instead it gets paid for its costs by charging higher (investor class share) fees in the underlying funds.
The question of three year limit is in a sense a side matter. I think it's interesting, but then again, I think most stuff is interesting. As I recall (it's been a little while since I read the case) ERISA does not support a continuing violations theory argument. In plain English, that means that the fact that the act is still ongoing (a continuing violation) doesn't save you from the three year statute of limitations.
The appeal claims (rightly I feel) that it's not a single ongoing act (that started more than three years ago), but repeated breaches of fiduciary duty. Every time a plan trustee acts or doesn't act, he or she is making a decision, which must be in the best interest of the employees.
This argument won't get damages going back more than the three year limit, but it should allow damages for the past three years, even on funds that were originally selected more than three years ago. Just MHO - I'm not a lawyer, I don't even play one on TV.
Comments
Derf
Some of what's at issue here is whether the employer could have the employees pay. The plan docs say no, but the docs also give employer the responsibility to interpret what "employer pays fees" means.
So, if employees pay implicitly (via higher retail fund fees and a kickback to the plan operator), does that violate the terms of the plan?
The employer is obviously taking the position that the requirement that the employer pay the fees refers only to explicit fees; those fees that are billed directly to the employer.
The case is not so much about retail vs. institutional class shares.
Where is all the outrage with Vanguard using investor class shares in its target date funds? Same idea - Vanguard doesn't charge the investor a management fee for those funds; instead it gets paid for its costs by charging higher (investor class share) fees in the underlying funds.
The question of three year limit is in a sense a side matter. I think it's interesting, but then again, I think most stuff is interesting. As I recall (it's been a little while since I read the case) ERISA does not support a continuing violations theory argument. In plain English, that means that the fact that the act is still ongoing (a continuing violation) doesn't save you from the three year statute of limitations.
The appeal claims (rightly I feel) that it's not a single ongoing act (that started more than three years ago), but repeated breaches of fiduciary duty. Every time a plan trustee acts or doesn't act, he or she is making a decision, which must be in the best interest of the employees.
This argument won't get damages going back more than the three year limit, but it should allow damages for the past three years, even on funds that were originally selected more than three years ago. Just MHO - I'm not a lawyer, I don't even play one on TV.