Insights on Economic Analysis of Fiduciary Monitoring Disputes Post-Tibble Published in Bloomberg BNA

Date:July 09, 2015
Contact:Suzanne Fletcher

Los Angeles -- Fiduciary monitoring has become a hot topic as a result of the US Supreme Court's decision in Tibble v. Edison International, according to recent expert insights published by Analysis Group Managing Principal D. Lee Heavner and Fiduciary Leadership LLC Managing Director and Analysis Group affiliate Susan Mangiero.

The Tibble ruling, which stated that plan fiduciaries have a responsibility to monitor investments and remove imprudent ones, is important because of the amount of assets in ERISA retirement plans -- approximately $7 trillion as of 2012, according to the US Department of Labor. This decision also comes against a backdrop of growing ERISA litigation. In 2014 alone, ERISA litigation settlements exceeded $1.4 billion, according to Benefits Pro, and this amount excludes the substantial legal costs of defending the cases. 

In the recent article "Economic Analysis in Fiduciary Monitoring Disputes Following the Supreme Court's 'Tibble' Ruling" (Bloomberg BNA's Pensions & Benefits Daily, June 24, 2015), Dr. Heavner and Dr. Mangiero explain that what constitutes a reasonable monitoring process may be influenced by plan- and investment-specific factors, as well as by the expected benefits and costs of different monitoring activities. "The monitoring of investments is a broad and complex topic. There is no uniform process that is appropriate in every situation. To the contrary, the list of potentially relevant risk factors is long and subject to revision as circumstances change." The authors also discuss how complexities arise when calculating economic damages due to the wide array of alternative actions and the substantial variation in timing that may be consistent with a prudent monitoring process.

"These are important issues that plan sponsors, fiduciaries, and ERISA lawyers and experts will have to address if, as expected, further challenges to fiduciary monitoring of investments emerge post-Tibble," said Dr. Heavner.

About Analysis Group
Since 1981, Analysis Group has provided expertise in economics, finance, health care analytics, and strategy to top law firms, Fortune 500 companies, global health care corporations, and government agencies. Our work is grounded in a collaborative approach that allows us to integrate the best ideas of leading academic and industry experts and our more than 550 professionals. As a result, our clients receive thoughtful, pragmatic solutions to their most challenging business and litigation problems. Through our work in thousands of cases across multiple industries we have become one of the largest economic consulting firms in North America, with 11 offices in the United States, Canada, and China.

About Fiduciary Leadership LLC
Fiduciary Leadership LLC provides compliance, dispute, and litigation support to asset managers, banks, institutional investors, and counsel. The firm provides a range of services, including investment research and analysis, asset-liability and risk management procedural prudence analysis, and valuation opinions and model testing.