I recently had the pleasure of speaking at an American Conference Institute ("ACI") sponsored conference about ERISA litigation. It's no surprise that fiduciary liability was the subject du jour, especially with an unprecedented number of lawsuits alleging breach and conflicts of interest. Even those who did not attend have taken the baton and opined on this important topic.

In "Resolving the 401(k) Fiduciary Dilemma" by Jeff Mamorsky (CFO.com, April 25, 2011), the point is made that Chief Financial Officers ("CFOs") are placed in a "precarious" position when serving as the named fiduciary "because of the inherent conflict between corporate and plan fiduciary responsibility," particularly in the event that employer stock is offered to participants as one of the choices available to them. Since a CFO owes a "fiduciary duty to shareholders," attorneys continue to debate how company executives should impart material non-public information that, if known, would sway share price.

On April 28, 2011, ERISA attorney Stephen D. Rosenberg writes about the dual role of the CFO in "Playing Hot Potato With Employer Stock" as "one of the most loaded issues in ERISA litigation. While the creation and monitoring of a stock volatility index (something described by Mamorsky and reflecting some of my comments made to him and others several years ago) offers one way to instill objectivity about whether to include company stock as a 401(k) choice, Rosenberg counters that no system is foolproof. He adds that "the best approach to the defense of such corporate officers" is "either to keep employer stock out of the plan itself" or "move the entire management and decision making on whether to hold company stock or not," "when to buy and sell it" and so on to "very qualified outside advisors."

Attorneys who presented at the aforementioned ACI conference on the topic of ERISA litigation were not universal in their thoughts about whether a company CFO should serve on a participant-directed retirement plan investment committee. Given cases that involve investing in company bonds at a time of distress, I wonder if stock drop litigation may eventually lay the groundwork for "bond drop" lawsuits that involve defined benefit plans.