Supreme Court Docket Report - December 13, 2013

Keywords: ERISA, fiduciary duties, investments, employer stock

Today (December 13, 2013) the Supreme Court granted certiorari in one case of interest to the business community:

• ERISA—Fiduciary Duties—Investments In Employer Stock

ERISA—Fiduciary Duties—Investments In Employer Stock

Fiduciaries who administer retirement plans governed by the Employee Retirement Income Security Act ("ERISA") generally have a duty of prudence to plan participants. See 29 U.S.C. § 1104(a). Among other things, fiduciaries are typically required to "diversify[] the investments of the plan so as to minimize large losses, unless under the circumstances it is clearly prudent not to do so." Id. § 1104(a)(1)(C). But because Congress wanted to encourage employees to invest in their own companies, it waived the duty of prudence "to the extent it requires diversification" for purchases of company stock. Id. § 1104(a)(2). Several federal courts of appeals have relied on this