PLANADVISER - September/October 2020 - 4

Legislative And Judicial Actions
compliance news //
 SEC Approves Shareholder
Proposal
A divided Securities and
Exchange
Commission
(SEC)
voted on September 10 to
adopt amendments to its
shareholder proposal rules,
which govern the process
by which a shareholder can
have a proposal included
in a company's proxy
statement
for
consideration
by the company's
other shareholders. The
SEC notes it has maintained
the
 DOL Proposes a
Rule on Benefit Plan
Proxy Voting
long-standing
$2,000 minimum ownership
threshold, but the amendments
would require that, to
take advantage of that ownership
threshold, a proponent must have
held the shares for at least three years,
to demonstrate long-term investment
in the company. Under the amended
rules, to put forward a proposal before
this three-year period, an individual or
entity must hold $15,000 of the company's
securities for at least two years, or
$25,000 for at least one year.
Critics of the rule amendments say
the new framework will make it significantly
harder for smaller shareholders
to put forward proposals. Notably, the
rule amendments provide for a transition
period so shareholders currently
eligible at the $2,000 threshold will
remain so " [as] long as they continue to
maintain at least their current holdings
through the date of submission (and ...
the date of the relevant meeting). "
 Fiduciaries of Mutual of
Omaha Plan Settle
Parties in a lawsuit accusing Mutual of
Omaha Insurance Co. and its subsidiary
United of Omaha of self-dealing in
the former's 401(k) plan have agreed to
settle. The settlement agreement calls
for a cash payment of $6.7 million as
compensation to a class of participants.
The original complaint alleged
that the 401(k)'s fiduciaries violated
their fiduciary duties by selecting
The Department of Labor
(DOL) has proposed a rule
that revisits how fiduciaries
should apply the prudence and
exclusive purpose duties under
the Employee Retirement
Income
Security Act
... the hospital
system agrees
to pay a sum of
$25 million to better
fund the plan, to
be paid in equal
annual installments
over the next
five years.
numerous investment options not to
benefit the plan or its employees, but
because they paid fees to Mutual of
Omaha or its subsidiaries.
The memorandum in support of
the motion for preliminary approval
of the settlement agreement says the
$6.7 million cash payment " represents
a substantial recovery. " The defendant's
attorneys say that substantiating
the plaintiffs' claims regarding exces(ERISA)
with respect
to proxy voting and exercise of other
shareholder
rights. (See
" Whether-
and How-to Vote Proxies, " page 43.)
The proposed rule amends the department's
long-standing investment duties
regulation. The DOL says it has issued
sub-regulatory guidance and individual
letters over the years affirming that, in
voting proxies and in exercising other
shareholder rights, plan fiduciaries
must consider factors that may affect
the value of the plan's investments and
not put unrelated objectives ahead of
participants' and beneficiaries' best
interests as to their retirement income.
The agency says previous communications
it published may have led to
some confusion or misunderstandings.
The proposal is designed to address
those issues through a notice and
comment rulemaking process that will
build a public record. The DOL will
then use this to develop an improved
investment duties regulation with the
goal of ensuring that plan fiduciaries
execute their ERISA duties in an appropriate
and cost-efficient manner when
exercising shareholder rights.
The proposal includes provisions
that would articulate general duties
requiring fiduciaries to vote any proxy
sive administrative fees would have
required detailed and expert examination
of the parent company's
operations,
and
records
of those.
the
supporting
financial
the
cost
" Proving plaintiffs'
claims regarding the Guaranteed
Account would have
been even more complex
and time-consuming, " the
memorandum states.
4 | planadviser.com September-October 2020
Art by Tilda Rose
http://www.planadviser.com
PLANADVISER - September/October 2020

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