The Supreme Court Considers the Scope of the Fiduciary Duty of Prudence Under ERISA With Respect to the Offering of Investments in Employer Stock
Last week, the Supreme Court heard oral argument in Fifth Third Bancorp. v. Dudenhoeffer, an ERISA “stock-drop” case where 401(k) plan participants have alleged that the plan’s fiduciaries breached their fiduciary duties by continuing to offer employer stock as an investment option even after the stock had purportedly become an imprudent investment. Several circuits have held that fiduciaries of plans that offer employer stock as an investment option are entitled to a presumption that their decision to offer the stock was prudent under ERISA, rebuttable only on a showing that the company was on the verge of collapse. The circuits are split on whether the presumption of prudence applies at the pleading stage.