CFOs Held Responsible For Breaches Of Fiduciary Duty

A recent issue of CPA Journal notes that retirement plan governance has grown in importance as employers face increased scrutiny of the way they operate their plans. CFOs and human resource managers administering 401(k) plans have been held responsible for fiduciary breaches, and DOL enforcement and participant lawsuits have resulted in monetary sanctions and damages against in-house fiduciaries. Among the cases highlighted: Settlements for more than $220 million for fiduciary breaches in Haddock v. Nationwide Life Ins. Co., Abbott v. Lockheed Martin Corp., and Krueger v. Ameriprise; A 2016 case in California (Urakchin v. Allianz) in which the court found that plaintiffs adequately alleged conflict of interest and improper fiduciary acts, and a motion to dismiss was denied; and a 2017 New York case (Sacerdote v. N.Y. Univ) in which the court denied a motion to dismiss the allegation that plan fiduciaries breached their duty of prudence with respect to incurring excessive record keeping fees, failed to diligently investigate and monitor record keeping cost, and were imprudent in the selection of certain investment options. The article notes that thirty-one percent of employers have faced a government audit of their plan, and larger employers report an even higher likelihood of audits.