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Arbitrator Rules in Favor of Client’s 401(K) Plan in ERISA Breach of Fiduciary Duty Case

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In July 2010, I handled a three-day arbitration in Denver, Colorado on behalf of an employer and its 401(k) Plan in an ERISA breach of fiduciary duty case. In a nutshell, my clients had engaged the services of an outside third-party administrator and registered investment advisor to handle the administration of their 401(k) Plan and to provide investment advice for the company's 401(k) Plan participants. Unfortunately, the administrators and investment advisor failed to notify my clients and the Plan participants of a “market value adjustment” that occurred when a certain investment held in the Plan was liquidated, and the Plan participants suffered a significant loss as a result.

Following the three-day arbitration, the arbitrator ruled that the administrator and investment advisor were chiefly responsible for the loss incurred by the Plan participants and ordered them to substantially reimburse them for the loss incurred as a result of their failure to inform the participants of the market value adjustment.