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How 12(b)-1 fees and revenue sharing may be the real victims of Monday's 'narrow' Supreme Court ruling

By unanimous decision, a conservative nine showed no tolerance for retail mutual fund share classes that achieve such status with fat fees that directly or indirectly pay 401(k) administration freight

Author Lisa Shidler May 20, 2015 at 4:18 PM
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Fred Reish: Participants will be able to sue for plans that were selected for inclusion in the plan more than six years ago but haven't been removed from the plan within the last six years.

Stephen Winks

Stephen Winks

May 20, 2015 — 10:54 PM

Continuous, comprehensive counsel is code for fiduciary duty but has not been adopted in a brokerage format. Tibble vs Edison is a landmark decision in several ways: (1)The important and essential duty of advisors monitoring client portfolios is established, (2) The importance of access to real time client holdings data which makes continuous, comprehensive data essential to fulfill fiduciary duty is not possible in a brokerage format, entailing a fundamental retooling of the brokerage industry, (3) Introduces the question of quarterly reporting of Mutual Fund holdings are sufficient for advisors to fulfill their fiduciary duty as portfolio monitoring is always delayed by at least three months , (4) Raises the question why “retail investors” who need the most help, are not accorded the same consumer protections accorded to all other investors.

Shouldn’t the best interest of the investing public always prevail if there is a question of what is the right thing to do?

The Supreme Court is a pretty powerful point of reference—though brokerage interests would not agree.

How can there be a difference between what the court holds and what Congress (controlled by Brokerage Interests) legislates? Has the best interest of the investing public been subverted?

Stephen Winks



May 21, 2015 — 3:34 PM

<<You might="" attribute="" that="" to="" politics="" except="" that="" the="" Supreme="" Court="" is="" mostly="" conservative="" and="" the="" executive="" branch,="" so="" I="" hear,="" is="" not.="">>

Oh, come on now… The U.S. Supreme Court currently consists of four deeply committed left-wing justices (Ginsburg, Breyer, Sotomayor, Kagan), three reliably conservative justices (Scalia, Thomas, Alito), and two swing judges (Kennedy and Roberts) who can go either way depending on their mood at the given moment and time. The truth is, one never can say with any certainty how the modern day Supreme Court will rule on any case.

As for the executive branch “so you hear” not being mostly conservative (and I wish I could tell if the author is deliberately trying to be tongue-and-cheek here)... Only someone steeped in their own progressive/leftist views would refuse to see or admit that the executive branch for the past six+ years has been occupied by the single most radical, rigid, ultra left-wing ideologue in our nation’s history.

Elmer Rich III

Elmer Rich III

May 22, 2015 — 3:43 PM

It is very rare now to get a agreement by the judges and telling that Breyer wrote the final opinion. It is very hard to know what evidence, research and data plan sponsors, or participants, could use to make professional judgments.

Our Rich and Co. Senior Associate Aryeh Younger, wrote a comment on his Huffington Post blog. Here is an excerpt:

“It seems that every other day we hear stories involving insider trading and unethical investing. The effects of unethical insider investing extend well beyond my school and into the life savings of American employees and retirees. However, this past week the Supreme Court granted a major victory to investors seeking to protect their assets in pension and 401(k)/defined contribution plans. In Tibble v. Edison, the Court interpreted the Employee Retirement Income Security Act (ERISA) to expand the fiduciary duties owed by managers of 401(k) plans.”

The full post is here:

Mentioned in this article:

Pension Resource Institute, LLC
Compliance Expert
Top Executive: Jason C. Roberts

Retirement Law Group, PC

Top Executive: Jason C. Roberts

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