PLANADVISER - July/August 2022 - 8

compliance news //
The rule document says e-filing
capabilities helped address logistical
and operational issues raised during
the COVID-19 pandemic, and that
expanding electronic submission
will allow the SEC and filers to more
effectively handle disruptive events
that may occur in the future.
few decades, so have the investment
options available to them. In the past,
the ruling states, most investment
options, whether for defined benefit or
defined contribution plans, turned on
active management, in which the portfolio
manager actively makes investment
decisions and initiates buying
and selling of securities in an effort to
maximize return.
The ruling goes on to note that, in
gauging the sufficiency of a complaint,
the 6th Circuit has taken " a well-worn
trail. "
As the appellate ruling stipulates,
the legal demand for plausibility
required the plaintiff to plead sufficient
facts and law to allow the court
to draw the reasonable inference
that the defendant was liable for the
misconduct alleged. The plausibility
of an inference depends, in turn, on
a host of considerations, including
" common sense and the strength of
competing explanations for the defendant's
conduct. "
The ruling concludes that, to the
contrary, it is in fact possible that
denying employees the option of
actively managed funds, especially
those individuals eager to undertake
more or less risk, would itself be imprudent
from a fiduciary perspective.
Reached for comment on the importance
of the new 6th Circuit ruling,
Daniel Aronowitz, managing principal
at the fiduciary insurance firm Euclid
Fiduciary, calls it " the best decision
ever written in an excessive fee case, "
as it effectively rebuts the arguments
of fiduciary imprudence asserted in
most of these lawsuits in which plaintiffs
ask the court to infer fiduciary
malpractice based on circumstantial
evidence of what participants consider
an undesirable outcome.
MEP Fee Lawsuit
A settlement agreement has been filed
in an Employee Retirement Income
Security Act lawsuit involving the
employer organization Nextep Inc.,
its board of directors and investment
committee for a multiple employer
plan the organization operates.
The complaint in the case alleged
excessive
investment
and
recordkeeping
fees, stating that, as a
large plan, the MEP had substantial
bargaining power regarding the
fees and expenses that were charged
against participants' investments. The
plaintiffs alleged that the defendants,
however, did not try to reduce the plan's
expenses or exercise appropriate judgment
to scrutinize investment fees or
negotiate better rates for recordkeeping
and administration services.
The plaintiffs in the case are represented
by the law firm Capozzi Adler,
which has been involved in an extensive
amount of ERISA litigation over
the past several years. The settlement
agreement, which includes a financial
settlement, stipulates that as much as
a third of these funds can go to pay
the plaintiffs' attorneys' fees,
$680,000,
leaving
about
less administrative
costs and expenses, to be distributed
among the sizable class of plaintiffs.
SEC E-Filing Rules
The Securities and Exchange Commission
voted unanimously to adopt
amendments that update its e-filing
rules, adding to the forms that must be
submitted electronically. The purpose
of the changes is multifold, says the
recently released rule document.
According to the rule, the amendments
will modernize the SEC's records
management process, promoting the
efficient storage, retrieval and analysis
of e-filings, and improve the agency's
ability to track and process them.
The document also says the amendments
should increase transparency
and operational resiliency by modernizing
how information is filed or
submitted and disclosed to the public.
Publicly filed electronic submissions
will be more readily accessible and be
available in easily searchable formats,
the document says.
The rule changes apply to registered
investment advisers, institutional
investment managers
and
others who file or submit reports to the
SEC's Electronic Data, Gathering, Analysis
and Retrieval system, or its Investment
Adviser Registration Depository
system. The requirements will affect
three types of filings that were previously
submitted on paper: confidential
treatment requests for Form 13F, applications
under the Investment Advisers
Act of 1940 and Form ADV-NR. Form
13F and the applications will now be
submitted to the EDGAR system, and
Form ADV-NR will be submitted to the
IARD system. The changes to Form
8 | planadviser.com July-August 2022
http://www.planadviser.com
PLANADVISER - July/August 2022

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