In Sulyma v. Intel Investment Policy Committee (9th Cir. 2018), the Ninth Circuit Court of Appeals ruled that in order for the statute of limitations to begin on a fiduciary breach, the one alleging the breach must have actual knowledge of imprudent plan investments.
The court reached a middle ground between lax mere knowledge of alternative investments like hedge funds that had higher fees and lower returns during a strong equity performance, and the too stringent legal knowledge that there was a breach of ERISA rules and regulations. With this new standard, there must be knowledge of the facts at hand and knowledge that the fiduciary’s financial actions were imprudent.
Even if the alternative investments were disclosed via something like a fact sheet, the court found that the plaintiff would not be constructively aware that they were imprudent investments. The court found that to start the statute of limitations running, the plaintiff had to have actual knowledge.
This case will likely make it more difficult to dismiss court cases for fiduciary breaches based on the statute of limitations expiring. The actual knowledge standard makes it more likely for fiduciary breach claims to make it to trial.
With Fiduciary Breach cases now more likely to go to trial, how can you protect yourself? Fiduciary liability insurance!
Where the ERISA fidelity bond is set in place to protect the participants of the plan it, however, does not protect YOU as the fiduciary.
Colonial Surety Company is a Treasury Listed surety company providing ERISA fidelity bonds packaged with fiduciary liability insurance, which includes a cyber liability insurance endorsement at no extra cost. Colonial is one of the leading providers of ERISA related products, offering bonds approved by the Dept. of Labor. We make it easy to obtain your bond instantly as well as allowing you to purchase retroactive insurance for the years the plan was not previously covered.
Under ERISA, fiduciaries may be held personally liable for a breach of their responsibilities in the administration or handling of employee benefit plans. Under ERISA 410, the plan cannot relieve you of this responsibility with indemnification language, however, it specifically permits persons with personal liability to purchase Fiduciary Liability Insurance. Covering yourself with Fiduciary Liability Insurance gives you a piece of mind that you are protected. Learn how to bundle your ERISA bond and fiduciary liability insurance for a discounted rate.
If you would like to learn more about purchasing an ERISA fidelity bond, or an ERISA fidelity bond package including fiduciary liability insurance and cyber liability insurance, call 888-383-3313 or email ERISADept@colonialsurety.com. Learn more about becoming a Pension Professional Partner here.