Publications

The Second Circuit, on October 19, 2011, held that “the decision not to divest [401(k)] plans of [company] stock or impose restrictions on participants’ investment in that stock are entitled to a presumption of prudence and should be reviewed for an abuse of discretion.”   By doing so, the court affirmed the dismissal of two ERISA stock drop cases, In re Citigroup ERISA Litig., No. 07 Civ. 9790, 2009 WL 2762708 (S.D.N.Y. Aug. 31, 2009) and Gearren v. McGraw-Hill Cos., Inc., 690 F. Supp. 2d 254 (S.D.N.Y. 2010), and joined the Third, Fifth, Sixth, and Ninth Circuits in adopting a presumption of prudence, first articulated by the Third Circuit in Moench v. Robertson, 62 F.3d 553 (3d Cir. 1995).  In addition to adopting the Moench presumption, the Second Circuit held that there is no affirmative duty under ERISA to disclose nonpublic information to Plan participants and that purported misstatements made by non-fiduciaries in SEC filings are corporate, not fiduciary, communications and thus not subject to liability under ERISA.