Employee Benefits News examines legal developments that impact the employee benefits and executive compensation employers provide, including federal and state legislation, rules from federal...
JPMorgan couldn’t convince a federal appeals court to review a decision forcing the company to defend a class action challenging its stable value funds ( In re JPMorgan Stable Value , 2d Cir., No. 17-01091, order denying leave to appeal 6/27/17 ).
The U.S. Court of Appeals for the Second Circuit on June 27 denied JPMorgan Chase & Co.'s request for an immediate appeal of a decision granting class action status to thousands of workers who invested their retirement savings in the company’s stable value funds. The court’s one-paragraph order said only that “an immediate appeal is unwarranted” in this case.
Stable value funds—which are meant to be conservative, low-risk options that protect against interest rate volatility—have become a flashpoint in litigation under the Employee Retirement Income Security Act. Retirement plan sponsors including Anthem Inc., Chevron Corp., and Insperity Inc. have been sued—unsuccessfully—for failing to include stable value funds in their investment lineups. Other lawsuits have targeted the companies that offer and manage stable value funds, with cases pending against Massachusetts Mutual Life Insurance Co. and Prudential Retirement Insurance & Annuity Co. Two companies— CVS Health Corp. and Fidelity Management Trust Co.—recently defeated lawsuits challenging their stable value practices, and a magistrate judge recommended dismissing a similar case against a subsidiary of Principal Financial Group Inc.
The lawsuit against JPMorgan accuses the company of mismanaging its stable value funds by overinvesting them in risky mortgage-related assets. Investors challenged the company’s decision to invest 78 of its stable value funds in a proprietary bond fund tied to “risky, highly-leveraged assets,” including mortgage-backed securities. The investors painted this strategy as imprudent, claiming that it caused losses that ultimately drove down the crediting rates that determined the return they received on their investments.
The Second Circuit’s decision was issued by Judges Robert D. Sack, Peter W. Hall, and Christopher F. Droney.
Morgan, Lewis & Bockius LLP represents JPMorgan. Kennedy & Madonna LLP represents the investors.
To contact the reporter on this story: Jacklyn Wille in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Jo-el J. Meyer at email@example.com
Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)