U.S. Dist. Judge Ellen S. Huvelle (D.D.C., Clinton) ruled Jan. 20 that officers and employees of an investment adviser may have breached their fiduciary duties to an the United Food & Commercial Workers Pension Plan for Employees, which is governed by Employee Retirement Income Security Act. Pension plan participants filed a class action against the trustees of the UFCW Pension Plan, claiming they breached their fiduciary duties to the plan by following the advice of Investment Performance Servs., the investment advisers and permitting a investment firm to implement a hedge program. UFCW Pension Plan’s executive committee approved an options-based hedge strategy, which allegedly resulted in a $37 million loss. Under ERISA, trustees found to have breached their fiduciary duties to the plan are personally liable for damages.
The trustees claimed the investment firm and IPS breached of their respective fiduciary duty. The participants amended their complaint to add three individuals, officers, and employees of IPS, who the participants claimed breached their fiduciary duty under ERISA by investigating, recommending, implementing, and continuing the hedge program.
Huvelle refused to dismiss the participants’ suit for failure to state a claim, finding that there was evidence that the individuals may have exercised some control over the plan and therefore might have acted as fiduciaries under ERISA. [BNA 2/11/02]