Cornell University’s recent victory in a lawsuit alleging retirement plan mismanagement added to the growing debate over whether routine contracts between employers and retirement plan service providers can be challenged under ERISA rules aimed at curbing conflicted and self-interested transactions.
The US Court of Appeals for the Second Circuit’s Nov. 14 decision favoring Cornell answered a question of first impression in the circuit: what plaintiffs must adequately allege to show that a retirement plan’s arrangement with a service provider violates an ERISA rule prohibiting transactions between plans and interested parties. According to the Second Circuit, a prohibited transaction claim based ...