Investments Must Be Monitored Regularly

The US Supreme Court has just decided that a statute of limitations does not protect fiduciaries who select a bad investment for an ERISA plan and do not correct it. In this case, fiduciaries picked high cost mutual funds for a 401(k) plan more than six years before the participants’ law suit, which stated that the fiduciaries should have purchased lower cost funds. The fiduciaries claimed protection of a six year statute of limitations. The Supreme Court held that the failure to correct bad investment decisions could be viewed as an ongoing ERISA violation and that the participants should have been allowed to try to prove their case. Although the Court did not provide a cookbook of do’s and don’ts, and did not specifically hold that the fiduciaries in this case should have switched to lower cost offerings of the same fund sponsor, the lesson is clear. Fiduciaries should monitor investment choices regularly and not expect bad decisions to be blessed by the passage of time when they could have been corrected. GLENN TIBBLE, ET AL., PETITIONERS v. EDISON INTERNATIONAL ET AL. 575 U. S. (May 18, 2015)