Compliance June 10, 2011

Solis Continues Effort in McCravy Case

Secretary of Labor Hilda Solis filed an amicus brief with the U.S. Court of Appeals for the Fourth Circuit asking for a rehearing and reversal in the McCravy versus MetLife case. 
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In the brief filed on May 31, Solis asked for a rehearing and reversal of an appellate panel’s ruling that a “surcharge” is not an available remedy under Section 502(a)(3) of the Employee Retirement Income Security Act (ERISA). She explained how the appellate panel relied on the Supreme Court’s decisions in Mertens v. Hewitt Assocs. and Great-West Life & Annuity Ins. Co. v. Knudson, and concluded that section 502(a)(3) of ERISA does not allow the court to surcharge Metropolitan Life Ins. Co (MetLife) for the life insurance proceeds that Debbie McCravy would have received from MetLife but for its alleged fiduciary breaches.

However, on the same day that the panel issued its decision, the Supreme Court decided CIGNA Corp. v. Amara, Solis pointed out. “Contrary to the panel’s decision holding that surcharge is unavailable, the Supreme Court’s decision in CIGNA states that surcharge is an available remedy under section 502(a)(3). The CIGNA opinion explains that surcharge, or monetary compensation by a fiduciary for loss resulting from the fiduciary’s breach of duty, was a ‘traditional equitable remedy’ and thus falls within the ‘category of traditionally equitable relief’.”

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“As CIGNA now makes clear, appropriate equitable relief under ERISA Section 502(a)(3) includes relief that makes injured participants and beneficiaries whole and thus permits the court to surcharge MetLife for the insurance proceeds that McCravy would have received but for the alleged breaches of fiduciary duty.”

Solis asked for a reversal of a lower court’s ruling when the case first came to the U.S. Court of Appeals for the Fourth Circuit (see “Solis Files Brief in Support of ‘Surcharge’ for Fiduciary Breaches”). 

The full text of the brief is at http://www.dol.gov/sol/media/briefs/mccravy%28A%29-5-31-2011.pdf

Products June 10, 2011

DST Introduces Retirement Income Solution

DST Retirement Solutions has hired Ian Sheridan as division vice president to implement its new Retirement Income Information Clearing & Calculation (RICC) offering.
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RICC is a central clearing and stand-alone recordkeeping platform designed to process and support guaranteed income products and their features, as well as integrate systems that support retirement income, DST announced. The solution allows for information sharing and provides capabilities to add, store and change guaranteed income contract details. Retail and institutional recordkeeping platforms can work with RICC and it can support multiple calculations for different products.

Sheridan will be responsible for bringing this solution to market. He most recently served as president of First Mercantile Trust Company, a member of the MassMutual Financial Group.  He has also worked at ADP Retirement Services and other industry-leading financial services companies.

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“The income investment solution set that RICC will serve comprises annuities and a broad range of daily traded investment products. I am excited to lead the initiative to bring this solution to market to help product manufacturers, product sponsors, insurance carriers and recordkeepers communicate with each other without having to build or purchase systems that have to be retrofitted to legacy systems-or worse, delaying solutions that can help workers today,” said Sheridan.

 

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