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PRESUMPTION OF ESOP FIDUCIARY PRUDENCE: A FADING MEMORY

July 03, 2014

By The Global Compensation, Benefits & ERISA Practice Group

The U.S. Supreme Court has heightened the risk that ESOP fiduciaries face. After Fifth Third Bancorp's stock lost most of its value, Plaintiff participants sued the ESOP fiduciaries for breaching their duty of prudence because they did not act on public and insider knowledge. The Court unanimously held that ESOP fiduciaries have no presumption of prudence when investing in employer stock and must ensure that the stock is a prudent plan investment.