Compliance April 15, 2009

ERISA Lawsuits on the Rise

According to a new analysis, lawsuits related to the Employee Retirement Income Security Act (ERISA) are increasing in number and complexity in terms of combinations of allegations.
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While that assessment probably won’t shock our readers, a new study on the subject provides an interesting framework for plan sponsors worried that they might inadvertently find themselves in a litigant’s crosshairs.
Based on more than 2,400 ERISA cases filed between January 1, 2005, and August 31, 2008, “ERISA Litigation Study – April 15, 2009” is a statistical overview of pension lawsuits by category, court, and case disposition, compiled by Pension Governance, Incorporated and its PensionLitigationData.com partner, The Michel-Shaked Group.
According to the study:
  • Nearly every case in the PensionLitigationData.com database is categorized as including an allegation of fiduciary breach. Other frequently cited issues include adherence to plan documents, the prudent man standard, remedies, and interference with benefits.
  • ERISA litigation volume was highest for the 2nd federal circuit court (New York, Connecticut, Vermont)—where nearly one in five cases were tracked; and in the 3rd (Pennsylvania, Delaware, New Jersey) and 6th (Kentucky, Tennessee, Michigan, Ohio) federal circuit courts. Activity was lowest in the 10th (Utah, Colorado, Nebraska, Oklahoma) and 11th circuits (Alabama, Georgia, Florida), where just 4% (each) of the cases were brought.
  • A majority of ERISA-related lawsuits settled out of court. More than one in five (22%) never got past the motion to dismiss, and another 28% were tossed at the point of a motion for summary judgment. Just 3% of all ERISA cases are disposed of at trial, according to the report.
  • Numerous cases (38%) examined reflect an ERISA Section 502 claim. (ERISA Section 502 relates to civil enforcements.) Claims arising in the 2nd and 6th Circuits accounted for 33% of all Section 502 claims.
  • Some legal venues favored plaintiffs in terms of the reported outcome. In fact, the study’s authors note that the 11th circuit “overwhelmingly favored plaintiffs’ (86% of the time) for the examined data set. Plaintiffs prevailed only 39% of the time in the 6th circuit, and just 40% in the 7th.
PensionLitigationData.com (PLD) is a subscription searchable database of pension litigation events. Focused on finance and investment issues, PLD includes cases posted since January 1, 2005. New cases are added on an ongoing basis.
The report is available here.
Products April 15, 2009

Pershing Program Helps B/Ds Serve Dually Registered Advisers

Pershing LLC, a subsidiary of The Bank of New York Mellon Corporation, launched a new program to help broker/dealers better serve investment professionals and registered investment advisers (RIAs).
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According to a press release, the program, RIA Complete, provides introducing broker/dealer firms with “…a broad array of business and practice management solutions to help them develop and enhance their business models to support RIA practices.” Through RIA Complete, Pershing says it works consultatively with its customers to help them identify an appropriate operating model that best supports their business regardless of how they generate income—models that it says range from leveraging a corporate advisory platform to developing an independent RIA practice.

The program also provides introducing broker/dealers with the option to serve RIAs through Pershing’s affiliate, Pershing Advisor Solutions LLC. RIA Complete will be supported by NetX360, Pershing’s next-generation NetExchange technology platform for investment professionals and RIAs. The announcement says that the new offering will provide Pershing’s customers with a “comprehensive solution to manage their firm’s entire commission- and fee-based business, including their advisory and managed accounts, on a single, integrated platform.”

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The announcement notes that Pershing’s customers have access to an array of practice management support, including guidebooks, seminars and self-service tools, as well as a program dedicated to providing them with best practices on how to make a successful transition to a fee-based business.

Pershing LLC provides financial business solutions to more than 1,150 institutional and retail financial organizations and independent RIAs. Its affiliate, Pershing Advisor Solutions LLC, provides financial business solutions to independent, fee-based RIAs and dually-registered advisers working with many of Pershing LLC’s introducing broker/dealer customers. Additional information is available at

Pershing LLC provides financial business solutions to more than 1,150 institutional and retail financial organizations and independent RIAs. Its affiliate, Pershing Advisor Solutions LLC, provides financial business solutions to independent, fee-based RIAs and dually-registered advisers working with many of Pershing LLC’s introducing broker/dealer customers. Additional information is available at www.pershing.com and www.pershingadvisorsolutions.com.

 

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