Products June 11, 2020

SBA Announces Benefit Plan Provider Search Service

The service is designed to help organizations make informed decisions about hiring and retaining providers when travel restrictions or budgetary constraints preclude in-person assessments.

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Strategic Benefits Advisors Inc. (SBA) has launched the Arm’s-Length Vendor Search, a service designed to help organizations make informed decisions about hiring and retaining benefit plan administrators, recordkeepers and other third-party service providers when travel restrictions or budgetary constraints preclude in-person assessments of prospective vendors.

Procurement policies require many plan sponsors to issue a request for proposals (RFPs) on a regular schedule or as contracts with existing service providers expire. For others, vendor searches represent an opportunity to resolve benefit administration challenges and negotiate more favorable pricing for outsourced services.

“Plan sponsors don’t want to put search projects on hold, but they’re unsure how to proceed in the current climate,” says SBA Founding Principal Andy Adams. “We are pleased to provide an elegant, cost-effective solution to this market need. We call it Arm’s-Length Vendor Search not only because it can be done remotely, but also because it eliminates conflicts of interest that occur when searches are performed by parties that earn referral commissions or have an interest in bidding for the same services they are evaluating. These remote searches can achieve everything a traditional search provides, enabling plan sponsors to select vendors with confidence.”

SBA performs vendor searches for a range of outsourced employee benefit services, including defined benefit (DB) plan administration, 401(k) plan recordkeeping, health and welfare plan administration, financial wellness services, actuarial services and investment advisers. 

According to Adams, Arm’s-Length Vendor Search engagements start at $25,000 depending on the nature and scope of the plan sponsor’s request.

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Compliance June 10, 2020

Fidelity Self-Dealing Case to Go to Trial on Zoom

In a letter filed in court, attorneys for the parties suggested ways to help streamline the trial and to eliminate all or significant parts of the testimony of several witnesses.

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The trial for an Employee Retirement Income Security Act (ERISA) lawsuit against Fidelity will proceed July 6 as a Zoom video conference.

In a letter to U.S. District Judge William G. Young in the U.S. District Court for the District of Massachusetts, attorneys for both sides noted that the liability issues in the case were previously decided by Young on a case stated basis. In a case stated decision, the parties waive trial and present the case to the court on the undisputed facts in the pre-trial record. The court is then entitled to engage in a certain amount of fact finding, “including the drawing of inferences.”

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Young’s previous ruling focused on answering important threshold questions as to whether Fidelity’s actions in the operations of its retirement plan violated ERISA—thereby establishing liability but not causation or loss. He found that Fidelity breached its duty of prudence by failing to monitor its mutual fund investments and by failing to monitor/control recordkeeping expenses. He said Fidelity, however, had not breached its duty of prudence by failing to investigate alternatives to those mutual funds because a prudent fiduciary would not be required to conduct those specific investigations.

Young also found that Fidelity had not engaged in prohibited transactions because its dealings with proprietary products were no less favorable to the plan as a whole than to other shareholders of Fidelity funds. The ruling stated that one defendant—FMR LLC—is liable for the breach of its duty to monitor the plan fiduciaries “with regards to their ongoing handling of the mutual fund investments and recordkeeping expenses.” Young also ruled that the plaintiffs “may recover from Fidelity entities for any profits traceable to the aforementioned breach of the fiduciary duty to monitor.”

In their letter, the attorneys suggested ways to help streamline the trial and to eliminate all or significant parts of the testimony of several witnesses. According to the court docket, Young treated the letter as a joint motion to amend the pre-trial order, and allowed the motion. He instructed the parties to inform the court of the reduced number of trial days now necessary for receiving evidence and arguments.

The progress in the case provides evidence of how ERISA lawsuit activity is continuing despite court lockdowns caused by the COVID-19 pandemic. Jamie Fleckner, partner at Goodwin Procter in Boston, previously told PLANSPONSOR, “Many judges, even before the outbreak, were sometimes deciding motions what they call ‘on the papers’ without lawyers coming in to present oral argument. They are doing so exclusively now.”

He said judges are either coming up with creative ways to keep cases moving or are continuing their own practice of not seeing lawyers until trial. Fleckner added that much of what an expert witness does happens before trial. The attorneys in the Fidelity case said in their letter that the defendants would provide the relevant portion of the supplemental report of their damages expert prior to the trial start date.

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