Managing Principal Lee Heavner Outlines the Importance of Using the "Expected Alternative Approach" in Calculating ERISA Plan Losses
May 09, 2012
In his recent article “Expert Analysis of Plan Losses in ERISA Class Action Litigation” (Pension & Benefits Daily), Managing Principal Lee Heavner compares two approaches that experts commonly use to estimate plan losses in ERISA class actions that involve allegations of imprudent investments. Dr. Heavner demonstrates that the “Best Performing Alternative Approach” is fundamentally flawed and does not produce reliable estimates of plan losses. He explains that, in contrast, the “Expected Alternative Approach” takes into account case-specific facts, is consistent with loss causation and other economic principles of damages, and produces reliable estimates of plan losses incurred as a result of the alleged breach. Dr. Heavner has served as a consulting expert in numerous ERISA matters, including employer stock drop and excessive fee cases, in which plan fiduciaries were alleged to have selected imprudent investments for participant-directed retirement plans.
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