Compliance March 2, 2022

Land O’Lakes Settles ERISA Fee Lawsuit

While it admits no wrongdoing in the settlement agreement, Land O’Lakes will pay $1.8 million into a qualified settlement fund.

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The parties in an Employee Retirement Income Security Act lawsuit filed against the Land O’Lakes dairy company have agreed to settle the litigation.

In July 2021, the U.S. District Court for the District of Minnesota stayed the lawsuit, which was originally filed in May 2020 against Land O’Lakes, the company’s board of directors and various committees tasked with operating the company’s defined contribution retirement plan.

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The underlying allegations in the suit are that Land O’Lakes and its officers failed to objectively and adequately review the plan’s investment portfolio with due care to ensure that each investment option was prudent in terms of cost. The suit also alleged the defendants impermissibly maintained certain funds in the plan despite the availability of identical or similar investment options with lower costs and/or better performance histories.

While it admits no wrongdoing in the settlement agreement, Land O’Lakes will pay $1.8 million into a qualified settlement fund that is to be overseen by an independent settlement administrator. These assets, minus attorneys’ fees that are capped at one-third of the overall settlement amount, will be distributed to plan participants and beneficiaries. In exchange for this payment, the class members will forego their right to pursue any related legal claims in the future against the various Land O’Lakes defendants.

Beyond the monetary payment, the settlement agreement includes other stipulations for Land O’Lakes, including that it must complete a request for proposal process related to the plan’s administrative and recordkeeping services and expenses. This is to be done within three years of the settlement date.

The full texts of the settlement agreement and its accompanying orders are available here.  

Investing March 2, 2022

Public Pensions Making Moves to Divest From Russia

New federal sanctions forced Colorado’s PERA to take its money out of a Russian state-owned bank almost immediately.

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The pressure to divest from Russian investments is everywhere. Both from an environmental, social and governance perspective and a financially prudent one, Russian assets are extremely high risk right now. But many of the United States’ largest pension funds still have assets in the country, making them vulnerable to even further financial downturn as the war with Ukraine wages on.

Moscow’s stock market is already amidst one of its worst crashes in history. The Russian Trade Index has plunged 23.6% between February 22 and February 25. It is expected to fall even lower throughout today as Russian banks have been cut off from SWIFT, the independent organization that facilitates international payments by linking more than 11,000 banks and other financial players in over 200 countries and territories.

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The United States’ largest pension funds, the California Public Employees’ Retirement System and California State Teachers’ Retirement System both have funds invested in Russian assets. A spokesperson for CalPERS told Reuters that the fund has $900 million in exposure to Russia. CalSTRS has approximately $800 million in Russian exposure, according to Reuters.

Colorado’s public pension fund had $7.2 million invested in a Russian state-owned bank called Sberbank. The new federal sanctions forced the fund to take its money out of the bank almost immediately.

In New Jersey, New York and Illinois, lawmakers are making similar calls to divest from Russian investments. New York state Senator Elijah Reichlin-Melnick proposed a law that would force the state’s pension fund, New York Common Retirement, to divest from any companies or organizations that have business ties with Russia.

New Jersey state Senator Paul Sarlo introduced a similar bill. New Jersey’s pension fund currently has $226.6 million invested in Russian equities. It also has $21.4 million invested in Belarus, a Russia ally that is currently holding a referendum about whether to allow Russian nuclear weapons on its soil.

Illinois House Minority Leader Jim Durkin is also trying to introduce a bill that would require all state-owned pension assets to be divested from Russian companies. Other major pension funds, like Pennsylvania Public School Employees’ Retirement System and Minnesota State Board of Investment, are currently trying to calculate their level of exposure to the Russian market, according to the Wall Street Journal.

This article was originally published on CIO, PLANSPONSOR’s sister publication.

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