PLANADVISER - July/August 2017 - 12

compliance news
Legislative and Judicial Actions
Voya Suit Dismissed
The U.S. District Court for the
District of Connecticut has dismissed
without prejudice a class-action Employee
Retirement Income Security Act
(ERISA) challenge filed by a participant
on behalf of the Cedars-Sinai Medical
Center 403(b) Retirement Plan.
Darlene Dezelan, the lead plaintiff,
alleged in the suit that Voya Retirement
Insurance and Annuity Co.
improperly profited from stable value
funds (termed " SVAs " ) offered to the
plan through annuity contracts.
According to the original complaint,
Voya sells group annuity contracts to
retirement plans, which include Voya
SVAs. The funds periodically credit
a certain amount of interest income
to the plans and to their participants
invested in the accounts. This income,
generally expressed as a percentage
of the invested capital, is determined
according to a crediting rate that Voya
has the discretion to set,
then reset
periodically. The lawsuit alleged that
Voya set the crediting rate " well below
the internal rate of return (IRR) on the
plan's deposits to the SVAs, guaranteeing
a substantial profit for itself. "
The court found that Dezelan,
whose plan does not offer the Voya
general account stable value funds,
lacks the standing to bring her claims.
The decision stressed that, to successfully
bring an ERISA suit to trial, a
plaintiff " must demonstrate both
constitutional standing and a cause of
action under ERISA. "
Self-Dealing Suit Filed Against
Capital Group
D'Ann Patterson, individually and on
behalf of all other similarly situated
participants and beneficiaries of the
Capital Retirement Savings Plan, has
filed a lawsuit against The Capital
Group Companies Inc., the board of
directors of Capital Group, the U.S.
Retirement Benefits Committee of
the plan, Capital Guardian Trust Co.
(CGTC), Capital Research and Management
Co. (CRMC) and Capital InterThe
bill would
increase the cap
on how much
stock closely
held companies
can award to
employees
before triggering
SEC reporting
requirements.
national Inc. (CII) for violations of
Employee Retirement Income Security
Act (ERISA) provisions regarding fiduciary
duties of and prohibited transaction
provisions between June 13, 2011,
and the present.
The
lawsuit
claims
that when
selecting and retaining investment
options in the plan, the benefits committee
put the interest of Capital
Group and its subsidiaries ahead
of plan participants and beneficiaries
by selecting, retaining and failing
to remove expensive group-affiliated
investment options managed by CGTC,
CRMC and/or CII. The suit says this
breached the plaintiffs' fiduciary duties
of prudence and loyalty, and generated
significant revenue for Capital Group
and its subsidiaries.
According to the complaint, during
the relevant period, between 94.7%
and 97.8% of all investments offered by
the plan were " the unduly expensive
Capital Group-affiliated investments
managed by CGTC, CRMC and/or CII. "
Further, it claims there was access to
comparable investment options, from
unaffiliated companies, that cost less
and have performed comparably, if
not better than, the Capital Groupaffiliated
investment options. It also
says the benefits committee selected
and retained the more expensive R5
share class of the funds despite the
availability of the less expensive R6
share class.
DOL Requests Comments
On Fiduciary Rule
The Employee Benefits Security
Administration (EBSA) of the Department
of Labor (DOL) published a
request for information (RFI) in
connection with its examination of
the DOL's final fiduciary rule under
the
Employee
Retirement
Income
Security Act (ERISA) and the Internal
Revenue Code (IRC).
Part of EBSA's examination will
be to evaluate the new and amended
administrative class exemptions from
the prohibited transaction provisions
of ERISA and the IRC that were
published in conjunction with the
rule. The RFI specifically seeks public
input that could form the basis of new
exemptions, or changes or revisions
to the rule and prohibited transaction
exemptions (PTEs). Input regarding the
advisability of extending the January
1, 2018, applicability date of certain
provisions in the best interest contract
exemption (BICE); the class exemption
for principal transactions, such as rollovers,
between investment advice fiduciaries
and employee benefit plans and
individual retirement accounts (IRAs);
and PTE 84-24.
12 | planadviser.com july-august 2017 Art by Jean Wei
http://www.planadviser.com
PLANADVISER - July/August 2017

Table of Contents for the Digital Edition of PLANADVISER - July/August 2017
