Among its many provisions, the Employee Retirement Income Security Act (ERISA) provides protections for two classes of individuals in particular. These are (i) employees who suffer investment losses due to improper conduct, and (ii) employees who report companies’ misconduct (known as “whistleblowers”) leading to investment losses.
ERISA is a complex statute, and despite all of its protections, employees often face an uphill battle when trying to exercise their legal rights. For many people, even understanding whether ERISA protects them can be a significant challenge. To help guide you, in this article we provide an overview of the types of improper conduct covered by ERISA.
This overview is provided for informational purposes only and should not be construed as legal advice. If you would like advice about your individual situation, we invite you to contact us for a free consultation.
Common Examples of ERISA Violations
The following are all common examples of misconduct that can lead to ERISA claims for employees who have suffered investment losses:
Failure to Act on Material Company Information
If your 401(k) or other retirement account includes an investment in your employer’s stock, your employer must take action to prevent investment losses in the event that its shares decline in value. This includes halting new purchases if the company becomes aware of information that is likely to harm its share value when released to the public. At Zamansky LLC, many of our ERISA investigations have focused on these types of cases.
Lack of Diversification (Overconcentration)
Just like other investment managers, plan managers for 401(k) plans, pensions, and other employer-sponsored retirement accounts must make prudent decisions on behalf of individual investors. This generally means diversifying in order to avoid the risk of substantial losses. If you have lost money because your plan manager over-concentrated your investments in a particular company, industry or investment product, you may be entitled to compensation under ERISA.
Breach of Fiduciary Duty
Both of the previous examples arise out of the same legal concept: the fiduciary duty that employers and plan managers owe to act in the best interests of employee-investors. If you have suffered investment losses due to any other type of breach of fiduciary duty, such as engaging in a conflict of interest or charging excessive fees, an experienced attorney will be able to help you protect your legal rights.
Whistleblower Protections Under ERISA and Other Laws
In addition to protecting employee-investors, ERISA also provides protections for whistleblowers. However, ERISA’s protections for whistleblowers are actually somewhat limited, and courts across the country are split on exactly how and when the statute’s whistleblower provisions apply.
Fortunately, there are a variety of other federal laws that provide whistleblower protections as well. If you have inside information about misconduct that has led to investment losses, you should speak with a lawyer before you make any other decisions about what to do next.
Zamansky LLC | ERISA Law Attorneys for Investors and Whistleblowers Nationwide
At Zamansky LLC, we provide experienced legal representation for investors and whistleblowers nationwide. If you have suffered investment losses in your employer-sponsored plan, or if you have information about misconduct leading to investment losses, call (212) 742-1414 or contact us online to speak with an attorney today.