07-1895 Nelson v. Hodowal

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Employment
ERISA; fiduciary duty

ERISA does not hold a fiduciary responsible for the decline in an investment's value, when an informed and independent investment adviser has been furnished without charge to all beneficiaries, who exercise full control over which investments their accounts will hold.

"A trustee's duty to furnish information to beneficiaries, on which see Restatement (Third) of Trusts §82 (T.D. 4, 2005), may be discharged directly or through an intermediary such as Merrill Lynch. Often delegating the function to a specialist is best for a novice investor.

Employees who participated in the Thrift Plan may have had little idea what to make of raw information such as the steps defendants took to cash out their stock options. But counselors from Merrill Lynch could put the defendants' sales in context with other information. As we have already mentioned, Merrill Lynch was engaged in part to promote intelligent diversification once extra investment options were offered in 1995. Plaintiffs have not referred us to any regulation or judicial decision obliging fiduciaries to disclose directly to participants rather than through professional investment counselors.

Sometimes trust law requires delegation to a professional such as Merrill Lynch. See Restatement (Third) of Trusts §80(2) & comment d(1) (T.D. 4, 2005)."

Affirmed.

07-1895 Nelson v. Hodowal

Appeal from the United States District Court for the Southern District of Indiana, Hamilton, J., Easterbrook, J.

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