According to Bloomberg Law, “National Indemnity Co. convinced a federal judge it didn’t breach its duties of prudence and loyalty in offering the Sequoia Fund as an investment option in its 401(k) plan.” The Fund suffered significant losses because of its holdings in Valeant Pharmaceuticals. A prudent process was helpful, and the investment committee was justified in simply relying on publicly available information regarding the fund and Valeant. The Court noted: “the record evidence demonstrates that the committee did not ignore the increased risk of maintaining the Sequoia Fund. Instead, as National Indemnity correctly points out, the Committee monitored Sequoia and the Plan’s other investments by meeting quarterly, reviewing performance evaluation reports from Wells Fargo, and relying on information in the financial press surrounding Valeant and the Sequoia Fund.”
George Michael Gerstein advises financial institutions on the fiduciary and prohibited transaction provisions of ERISA. As co-chair of the fiduciary governance group, he assists clients with tracking, and understanding, the numerous fiduciary developments at the federal and state levels, including the rules and regulations of governmental plans. He also advises clients with respect to the fiduciary duty implications of ESG investing.