Solis Asks Court to Overturn Exelon Excessive Fee Case Decision

March 26, 2010 (PLANSPONSOR.com) - Secretary of Labor Hilda L. Solis has filed an amicus brief asking the 7th U.S. Circuit Court of Appeals to overturn a trial court's dismissal of a class action against Exelon Corp.

The class action alleged Exelon Corp. breached its fiduciary duties by selecting retirement plan investment options that charged fees that were excessive. U.S. District Judge John W. Darrah of the U.S. District Court for the Northern District of Illinois compared allegations in the Exelon case to those in Hecker v. Deere & Co. and found they were nearly identical (see Hecker Fee Case Prompts Exelon Suit Dismissal ).      

According to BNA, Solis argued in the brief that in dismissing the Exelon employees’ Employee Retirement Income Security Act fiduciary duty claims, the trial court required an “unduly high pleading standard” not contemplated by ERISA. Solis’s also contended the lower court misread the 7th Circuit’s ruling in Hecker.      

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BNA said the secretary argued that the Hecker decision was confined to the facts of that case as presented in the pleadings and the decision was not intended to bar all types of claims in situations where tax code Section 401(k) plan participants claim that plan service providers charged excessive fees in relation to the services provided. “By continually returning to the point that the panel’s opinion was limited to the particular facts as alleged, Hecker clearly and deliberately left the door open for other cases like this one in which the allegations about fees are tied directly to allegations about services,” Solis said in the brief.      

Solis argued that the 7th Circuit and U.S. Supreme Court precedent establishes that the federal civil court system operates on a “notice pleading standard,” and the employees’ complaint in this case met that standard because the allegations were sufficient to put the defendants on notice of the claims against them.      

“[I]t was not appropriate for the district court to resolve factual issues, such as whether the plaintiffs received additional services for the fees they paid, at this stage in favor of the defendants, particularly as well-pleaded facts are to be construed in the non-moving party’s favor,” the brief said, according to BNA.      

In addition, the secretary argued that the district court misread the Hecker decision when the lower court said the outcome of the case against Exelon was controlled by Hecker. “Hecker is not controlling because the participants’ amended complaint distinguishes this case from Hecker in key part. Notably, given the opportunity to clarify its opinion in response to the petition for rehearing, the Hecker panel went out of its way to explain that the decision is narrowly tailored to its facts,” Solis wrote.      

Among other things, the secretary argued that the Hecker decision should not be read as establishing, as a legal proposition, that the particular range of fees for the plans’ investment in that case was prudent, without regard to the particular facts, circumstances, and context of each case. “Nothing in ERISA or Hecker establishes that a particular numerical range of fees is either per se prudent or per se imprudent, or authorizes the courts to fashion a simple numerical test, without regard to what evidence actually shows after the plaintiffs have been given an opportunity to present their case at trial or on summary judgment,” the brief said.

PLANSPONSOR Announces Retirement Plan Adviser and Adviser Team of the Year

Rick Wedge of of Novato, California-based Northgate Benefits, an NRP member firm, has been named the 2010 PLANSPONSOR Retirement Plan Adviser of the Year and The Prince Group, Stifel Nicolaus, has been named the 2010 PLANSPONSOR Retirement Plan Adviser Team of the Year.

Wedge and The Prince Group were selected from a pool of more than 425 nominations. Nominations were solicited online from retirement plan advisers, their employers and/or broker/dealers, and plan sponsors, as well as from working partners of these advisers, including investment vendors, accountants and attorneys, and pension administrators (advisers who have attained the PLANSPONSOR Retirement Professional (PRP) designation receive an automatic nomination).

As an individual adviser, Wedge is distinguished by his passion for delivering investment education to 401(k) participants. He offers general education to new participants and more customized education sessions targeted to specific employee audiences. He also provides one-on-one education, and delivers personalized investment advice to those who request it.

Other finalists for the 2010 Retirement Plan Adviser of the Year included:

  • Timothy Black, Mosse & Mosse Associates, Marlborough, Massachusetts 
  • L. Rita Fiumara, UBS Financial Services, Inc., Chicago, Illinois    
  • Jennifer San Fillippo, La Bri Group, First Allied Securities, Brookfield, Wisconsin
  • Attila Toth, Portfolio Evaluations, Inc., Warren, New Jersey        

 

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The Prince Group, Stifel Nicolaus, and its members (Douglas Prince, Brea Dantin, Deana Harmon, Jillian Grimm, Joe Copeland, Ben Donathen, and Sue Platt) seek to provide plans with a comprehensive range of services. According to the sponsor of a mid-size plan that has worked with The Prince Group for more than five years, the company has had a significant impact on its program. “Our employees now see this as a great benefit. Doug Prince and his team are always going the extra mile, and they help prod our organization to be better today than we were yesterday.”


Other finalists for the 2010 Retirement Plan Adviser Team of the Year were:

  • The Dallas Office of Lockton Financial Advisors/Lockton Investment Advisors (David W. Altimont, Lucas M. Barton, Courtney Stroope, Erika Chavez, Kim Pacheco), Dallas, Texas 
  • Michael M. Kane and Associates , an NRP member firm, (Michael Kane, Mary Kane, Ashley Black, David Robinson), Alpharetta, Georgia
  • Plan Sponsor Advisors (Jennifer Flodin, Don Stone), Chicago, Illinois     
  • Precept RPS (Linda Bright, Doug Igel), Irvine, California


Launched in 2005, the PLANSPONSOR awards recognize the contributions of the nation’s best financial advisers in helping make retirement security a reality for workers across the nation. “The retirement security of millions of Americans depends on 401(k) and other employer-sponsored programs, and most plans today rely on the skills and presence of a financial adviser,” said Nevin Adams, Editor-in-Chief of PLANSPONSOR. “These awards recognize the contributions of the nation’s best financial advisers, who help make retirement security a reality for workers across the nation.”

In addition to Adams, the judge’s panel for the awards included Steff Chalk, CEO, Fiduciary Consulting Group and Alison Cooke Mintzer, Executive Editor, PLANADVISER. The rest of the panel for the Retirement Plan Adviser of the Year were John Barry, Registered Principal, JMB Wealth Management, Inc. (2008 PLANSPONSOR Retirement Plan Adviser of the Year) and Steven Dimitriou, Managing Partner, Mayflower Advisors, LLC (2009 PLANSPONSOR Retirement Plan Adviser of the Year).

The other members of the Retirement Plan Adviser Team of the Year judging panel were Barbara Delaney, Principal, StoneStreet Equity, a Member Firm of National Retirement Partners (representing FFoA, the 2008 PLANSPONSOR Retirement Plan Adviser Team of the Year) and Michael Goss, Executive Vice President, Fiduciary Investment Advisors, LLC (representing Fiduciary Investment Advisors, LLC, the 2009 PLANSPONSOR Retirement Plan Adviser Team of the Year).

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