【正文】 6 Amsted Case ? Court states the ―the decisions of independent and experienced fiduciaries garner deferential review, while decisions of fiduciaries with a conflict of interest … do not receive such deference‖ ? ESOP trustee was not required to make an independent investigation of acquisition ? Court emphasized the extensive monitoring activity taken by the ESOP trustee 17 Amsted Case (cont.) ? Ruled that no one would have predicted the unprecedented increase in repurchase obligation resulting from drop in stock price ? Acquired pany price was determined by auction in an arm’slength transaction ? A mere showing of a drop in FMV of shares of an ESOP is not sufficient to establish imprudence of the ESOP trustee 18 Amsted Case (cont.) ? Decision – Court will not substitute its judgment when trustee is independent and experienced – Judicial review of independent trustee is highly deferential – Decision upheld unless independent trustee is found to have acted arbitrary and capricious – ESOP trustee is not responsible for second guessing decisions of management – ESOP trustee continues to have a duty to monitor management to protect the pension benefits of ESOP participants 19 Champlain Enterprises Case ? ESOP trustee did not have supporting notes or minutes to verify questions asked and discussions had ? ESOP trustee has burden to show that value is determined by the fiduciary ―in good fair‖ ? ―Focus of the Good Faith inquiry is not on the end – the final product – but on the means – the conduct of the fiduciary is getting to the final product‖ ? Court found that the trustee had little documentation of the actions it had taken 20 Enron Litigation ? DOL amicus brief and separate lawsuit against fiduciaries – Duty to disclose vs. duty not to mislead 21 Enron Litigation Lessons ? Executives who also serve as plan fiduciaries have dual loyalties and do not have a lesser fiduciary standard – Critical to make it clear when executive is acting in each capacity – greater risk occurs when it is unclear which ―hat‖ executive is wearing – When municating with participants, dualhat executives are presumed to act as fiduciaries – Corporate position and inside information is twoedged sword: enhanced expertise is a plus, but nonpublic information is a burden 22 Enron Litigation Lessons (cont.) ? Appointing a fiduciary carries with it the duty to monitor closely the fiduciary’s performance. – Duty to act when appointed fiduciary knows of possible breach – Could include duty to assure that the appointed fiduciary has accurate information on employer’s financial condition – Not a responsibility to carry out appointed fiduciary’s duty but to oversee and perhaps replace appointed fiduciary 23 Enron Litigation Lessons (cont.) ? Speaking to participants about the security of their benefits, investment of their plan assets, or pany stock as an available investment can cause an executive to be acting as a fiduciary – Discourage executive management from making statements perceived by participants as intended to influence typical participant behaviors (. when and how to contribute, invest, or take a distribution) ? A fiduciary has a duty not to mislead plan participants and to correct misleading information from others. – If a fiduciary knows or should know that participants have been given misleading information, silence and inaction constitute breach of duty of loyalty 24 Enron Litigation Lessons (cont.) ? A fiduciary has a higher duty to disclose information if necessary for participants to protect their retirement benefits ? Inform