PLANADVISER - September/October 2020 - 5

where the fiduciary prudently determines
that the matter being voted
upon would have an economic impact
on the plan. It also prohibits them from
voting any proxy unless the fiduciary
prudently determines that the matter
does have an economic impact on the
plan. To assist fiduciaries in complying
with these duties,
the proposal also
sets forth " permitted practices " under
which the plan fiduciary may adopt
certain proxy voting policies and
parameters reasonably designed to
serve the plan's economic interest.
The comment period ended on
October 5.
 Sulyma Joins a Second
Lawsuit Against Intel Corp.
Christopher M. Sulyma, a former
participant in two retirement plans
sponsored by Intel Corp., and whose
original Employee Retirement Income
Security Act (ERISA) lawsuit was heard
by the U.S. Supreme Court, has reiterated
his claims, joining another suit
that questions underlying investments
in the plan's target-date funds (TDFs).
The more recent suit was filed a year
ago August by Winston R. Anderson.
During the plaintiff's original case,
filed in 2015, Intel argued that the suit
was not
filed within ERISA's shorter,
three-year, statute of limitations, which
applied because the plaintiff had " actual
knowledge " of the use of the underlying
investment options in the TDFs. Intel
based its actual knowledge argument
on the fact that investment disclosures
were posted on a website that the plaintiff
had visited.
In February,
the Supreme Court,
ruling that Sulyma's case could move
forward, found that although ERISA
does not define the phrase " actual
knowledge, " its meaning is plain.
Actual knowledge is only established
by genuine, subjective awareness of
the relevant information being considered-not
by the mere possession of
documents or the theoretical availability
of information in print or digital
disclosures sent to would-be litigants,
the high court said.
The new, combined lawsuit challenges
the use of hedge funds and
private equity investments as underlying
funds in custom TDFs offered
in Intel's defined contribution (DC)
retirement plans.
 Comments Sought on Form 5500
The IRS is soliciting comments
concerning the Form 5500 Annual
Return/Report of Employee Benefit
Plan. Proposed changes include adding
a new box for plan sponsors to check,
on Form 5500, Form 5500-SF and Form
5500-EZ if the sponsor has retroactively
adopted an initial plan under
the Setting Every Community Up for
Retirement
Enhancement
(SECURE)
Act Section 201. Also proposed is
whether to add check-boxes to Form
5500-EZ Part IB, to request an extension
of time.
Comments are invited on: whether
collection of such information is
necessary for the agency to properly
perform its functions-e.g., does the
information have practical utility;
whether the agency's estimate of the
burden that
collecting
information
places on the plan sponsor is accurate;
ways to enhance the quality,
utility and clarity of the information
to be collected; ways to minimize the
burden of the collection of information
or other forms of information technology
(IT); and estimates of capital or
startup costs and costs of operation,
maintenance and purchase of services
to provide information. The comment
period ends on November 2.
 SEC Issues a Risk Alert
The Securities and Exchange Commission
(SEC) has published a new Risk
Alert, highlighting the hacking technique
known as " credential stuffing. "
As the agency explains, credential
stuffing is an evolving cyberattack
method that uses compromised client
login credentials, obtained from the
dark web, to try to log in to the website
of
an SEC-registered
adviser
(RIA) or broker/dealer
investment
(B/D)
and its customer accounts. This can
result in the loss of customer assets
and unauthorized disclosure of sensitive
personal information. The agency's
Office of Compliance Inspections
and Examinations (OCIE) has observed
in recent examinations an increase in
the number of such cyberattacks using
various forms of this strategy.
The SEC warns that, as hackers
become more and more sophisticated,
credential stuffing is emerging as a
more highly effective way for them to
gain unauthorized access than by traditional
brute-force password attacks.
The Risk Alert covers a number of strategies
that firms have adopted to try to
stymie these types of attacks, including
the use of multifactor authentication,
which requires multiple verification
methods to authenticate the person
seeking to log in to an account. The
strength of authentication systems is
largely determined by the number and
type of factors, the SEC says.
 Church Plan Case Reaches
$25mm Settlement
A settlement agreement has emerged
in the Employee Retirement Income
Security Act (ERISA) lawsuit known
as Smith v. OSF Healthcare System. This
conclusion to the church plan lawsuit
comes only after multiple rulings
in district and appellate courts. The
plaintiffs in the case are a class of
former employees and participants
in one of OSF's pension plans. Their
lawsuit argued that OSF was inappropriately
relying on the " church plan
exemption " included in ERISA, which
provides that retirement plans run by
" principal-purpose "
religious organizations
do not have to meet certain
participant protection standards and
funding requirements demanded of
corporations and most other employers
sponsoring tax-qualified pensions.
Specifically, the plaintiffs alleged
that OSF, in violation of ERISA, relied
on the exemption to allow its plans to
become severely underfunded. They
alleged that the OSF pension plan's
holding assets are sufficient to fund
only roughly 56% of accrued benefits.
OSF admits no wrongdoing, but 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. The agreement
permits a maximum attorneys fee of
$1.75 million for the class counsel. The
settlement agreement also provides
certain nonmonetary relief. -PA
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PLANADVISER - September/October 2020

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