PLANADVISER - January/February 2020 - 6

Legislative and Judicial Actions
compliance news //
 SCOTUS Issues Limited Ruling
In IBM v. Jander
The U.S. Supreme Court (SCOTUS)
has ruled in Retirement Plans
Committee of IBM v. Larry W.
Jander, remanding the case
back to the 2nd U.S. Circuit
Court of Appeals.
In
mid-2019, IBM asked the
high court to hear the
case after the 2nd Circuit
reversed the company's
district court win.
Plaintiffs allege that IBM
imprudently managed
company stock investments
in one of its retirement
plans; their lawsuit
is a classic example of stock
drop litigation.
" The
question
presented
in this case concerned what it
takes to plausibly allege an alternative
action that a prudent fiduciary
in the same circumstances would not
have viewed as more likely to harm
the fund than to help it, " the decision
explains. " It asked whether Dudenhoeffer's
'more harm than good' pleading
standard can be satisfied by generalized
allegations that the harm of an
inevitable disclosure of an alleged
fraud generally increases over time.
... The 2nd Circuit did not address
these arguments, and, for that reason,
neither shall we, " the Supreme Court
ruled. " We are a court of review, not
of first view. "
 PIMS Consents to FINRA Censure
For Inadequate Supervision
The Financial Industry Regulatory
Authority (FINRA) has published a
letter of a waiver and consent acceptance,
entered into by member firm
Prudential
Investment Management
Services (PIMS). FINRA says a lapse in
sufficient supervision led to Prudential
retirement plan clients being supplied
with inaccurate investment expense
ratio and performance information.
" Throughout the period of these
violations, PIMS did not have superby
ensuring that its communications
to customers about retirement plan
investments and related investment
options were accurate, "
the letter states.
As part of this matter,
PIMS has consented to a
censure and a fine in the
amount of $1 million. In
addition, the firm has
agreed to retain at its
own expense one or more
qualified independent
consultants " not unacceptable
to FINRA " to
conduct a comprehensive
review of the adequacy of
the firm's compliance with
FINRA rules 2210(d)(1)(A)
and (B), and 3110(a) and (b), in
connection with the violations
described.
While denying all
liability for the claims
made in the lawsuit
and maintaining
that they are without
any fault or liability,
the defendants
have agreed
to pay a gross
settlement amount
of $12,375,000 to
resolve all claims.
visory systems or written supervisory
procedures reasonably designed to
achieve compliance with the content
standards of FINRA's advertising rule
 Settlement Agreement Reached
In Northrop Grumman
A settlement agreement has been
reached in a case accusing Northrop
Grumman and its 401(k) administrative
and investment committees of
various breaches of Employee Retirement
Income Security Act (ERISA)
fiduciary duties. While denying all
liability for the claims made in the
lawsuit and maintaining that they
are without any fault or liability, the
defendants have agreed to pay a gross
settlement amount of $12,375,000 to
resolve all claims.
According to the original complaint,
the defendants-including Northrop-
" acted to benefit themselves and
Northrop by paying plan assets to
Northrop purportedly for administrative
services Northrop provided to the
plan, which were not necessary for
administration of the plan or worth the
amounts paid. Defendants also caused
the plan to pay unreasonable recordkeeping
fees to the plan's recordkeeper
and mismanaged the plan's emerging
markets equity fund. "
The plaintiffs also accused the plan
and its administrative and investment
6 | planadviser.com January-February 2020
Art by Nadja Zinnecker
http://www.planadviser.com
PLANADVISER - January/February 2020

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