White v. Marshall & Ilsley Corp.

Plaintiffs filed a putative class action, claiming that fiduciaries for their retirement plans violated the Employee Retirement Income Security Act, 29 U.S.C. 1001, by continuing to offer employer stock as an investment option while the stock price dropped. The individual retirement account plan at issue allowed employees to choose among more than 20 investment funds with different risk profiles that had been selected by plan fiduciaries. ERISA imposes on the fiduciaries a duty to select only prudent investment options. One of the investment options in the Plan was the M&I Stock Fund, consisting of M&I stock, under an Employee Stock Ownership Plan. In 2008- 2009, M&I’s stock price dropped by approximately 54 percent. The district court applied a presumption of prudence, found that plaintiffs’ allegations could not overcome it, and dismissed without addressing class certification. The Seventh Circuit affirmed, stating that plaintiffs’ theory would require the employer and plan fiduciaries to violate the plan’s governing documents and “seems to be based often on the untenable premise that employers and plan fiduciaries have a fiduciary duty either to outsmart the stock market, which is groundless, or to use insider information for the benefit of employees, which would violate federal securities laws.” View "White v. Marshall & Ilsley Corp." on Justia Law