Stockbroker Law - Tuesday, December 31, 2013
Functional Fiduciary Liability Under ERISA

There are over one million ERISA-qualified pension plans in the United States, including two hundred thousand defined benefit plans.  At one time, defined benefits plans were the predominant vehicle for employer-funded employee retirement plans until the emergence of the defined contribution plan, also known as 401K plans.

Defined benefit plans, due to punitive aspects of potential liability under the federal ERISA statute, coupled with the high annual costs for actuarial, accounting, compliance, insurance and funding responsibilities, most employers no longer offer defined benefit plans as a retirement benefit option, opting instead for defined benefit/401K plans, which are becoming more self-directed by employees maintaining their investment selections in individual accounts as opposed to pooled accounts.

The spector of personal liability under ERISA still looms large for individuals employed by firms who are involved with, or actively interfaced with, planned funds and investments.  Further, a civil complaint from an employee can trigger an expensive and protracted investigation by the United States Department of Labor, even if unfounded.  Individuals not specifically designated as plan trustees or fiduciaries can be held liable under the functional fiduciary provisions of ERISA (29 U.S.C. §1932, et. seq.) for imprudent investments, lack of diversification, funding discrepancies, ERISA compliance issues, and failure to follow employee directions.

The blow back of potential liability under the functional fiduciary provisions of ERISA has led thousands of defined benefit plan trustees and employers to shut them down to avoid the possibility of financial ruin under civil recovery and penalty provisions under ERISA.

The Law Offices of Timothy J. O’Connor practices securities law in the Tri-City Capital District of Albany, Schenectady and Troy.  We also represent victimized investors throughout the rest of New York State, including Buffalo, Binghamton, Rochester, Syracuse, Watertown, Utica, Kingston, Poughkeepsie, New York City/Manhattan, Long Island, and everywhere in between, as well as in the surrounding states of Massachusetts, Vermont, New Hampshire, Connecticut, and New Jersey.


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