The Corporate Board Member has this very good article: “What if Your Company’s 401(k)Plan Lays an Egg?” With respect to the Department of Labor’s suit filed against the Enron plan fiduciaries last summer, the article notes:
The lawsuit, filed by the Department of Labor in June, doesn’t just go after the Enron officers in charge of the 401(k) plan and the executives to whom they reported. It also names as defendants Enron’s board of directors, for not properly overseeing the plan. If the Labor Department prevails at trial, each director will be potentially liable for the entire $2.1 billion Enron 401(k) participants lost.
The article emphasizes how boards can’t afford to wait for Congress to act in defining their ERISA fiduciary responsibilities. It goes on to point out that the suit brought by the DOL “charges Enron’s top officers and board, the supposed monitors of the retirement investment plan, with failing to act on public and private information about the company’s financial condition” and that “[m]any would define this as a brand-new boardroom responsibility.” Quote of note: “Says attorney Sherwin Kaplan: “If plaintiffs’ lawyers had stood up a year ago and said that directors were responsible for telling employees that the company stock was not a good investment, they would have been laughed out of court. This suit has made it a credible position to assert.”