In the wake of Fifth Third v. Dudenhoeffer, a complaint that seeks to hold an ERISA fiduciary liable for failing to divest a plan of employer stock based solely upon publicly available information fails to state a plausible claim. An “independent” fiduciary—by the nature of his outside status—only has access to public information. For this reason, claims that an independent fiduciary breached his ERISA fiduciary duties in connection with publicly traded company stock necessarily fail post-Dudenhoeffer.

The plaintiffs’ bar may attempt to plead around this fatal flaw by claiming that appointing fiduciaries have some duty to “disclose” nonpublic information to independent fiduciaries. As discussed herein, there is no such duty in ERISA’s statutory framework. To impose such a disclosure obligation upon appointing fiduciaries would violate the securities laws or the “objectives” of those laws, in direct contravention of the US Supreme Court’s reasoning in Dudenhoeffer.

Originally published in Benefits Law Journal, Summer 2015, Volume 28, Number 2, pages 62–68.