Our colleague Sharon L. Lippett
Following is an excerpt:
Fiduciaries of employee benefit plans subject to the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) that appoint investment managers (“Appointing Fiduciaries”) will be interested in the opinion of the U.S. District Court for the Western District of Pennsylvania in Scalia v. WPN Corporation, et al (“WPN”) regarding their duty to monitor investment fiduciaries. Given the potential risk related to a breach this fiduciary duty, the WPN opinion is likely to be an important one for Appointing Fiduciaries.
In WPN, the Department of Labor alleged that the Retirement Committee for two plans sponsored by Wheeling Corrugating Company and its affiliates (the “Retirement Committee”) breached its fiduciary duty by failing to monitor the investment fiduciary appointed to manage plan assets (the “Investment Manager”) and failing to remove the Investment Manager when it did not follow instructions from the Retirement Committee to diversify plan investments. The Retirement Committee took the position that it fulfilled its duty to monitor by implementing a routine monitoring procedure, adhering to it, reviewing reports from an investment adviser, identifying the actions of the Investment Manager that were not consistent with Retirement Committee directions, and taking corrective action with the assistance of counsel. The court agreed with the Retirement Committee and granted its motion for summary judgment. …