Trustees’ Fiduciary Exposure

Fiduciary Exposure for Trustees, ERISA Plan Sponsors, Charity Board Members

Trustees are investment fiduciaries, serve voluntarily “ultimate managers” of private trusts, ERISA pension, profit sharing and 401k plans; charities, tax exempt, 501c3 non-profit organizations, including foundations and endowments. Courts have found they bear personal responsibility.

Securities-licensed stockbrokers, SEC or state registered investment advisers, trust officers, private bankers; insurance agents, other unlicensed investment professionals and occasionally CPAs, Accountants, Bookkeepers, Personal Care Givers (and or their employers), Business managers and Attorneys occasionally unwittingly wander into the zone of fiduciary liability.

What matters is the functions performed on behalf of a trust or ERISA pension, profit sharing or 401k plan; charity, foundation or endowment. In the ERISA arena, liability may arise due to the omissions or actions of other fiduciaries.

Our experience shows some Trustees, ERISA Plan Sponsors, HOA boards, Charities, Foundations Endowment trustees are not managing or paying careful attention, are often out of date, unaware, uninformed or incompletely informed, making or failing to make prudent decisions; absent policies, procedures and documentation these trustees and the attendant fiduciary accounts are very exposed to risk of loss and or litigation for breach of fiduciary duty.

In the wake of the Global Financial Crisis (2008), Madoff (2008), Stanford ponzi schemes (2009), private pension shortfalls and 401k fees cases, state, agency and local public pension funding shortfalls, disputes in family trusts and non-profit governance miscues, ERISA participants, beneficiaries and the public seek to hold trustees and co-fiduciaries in the securities and broader professional services more accountable in addition to increased scrutiny from self regulatory (FINRA) and federal (SEC) and state regulatory agencies.

In nearly every dispute whether trust or non-trust account, IRA, ERISA pension retirement benefit plan, charity, non-profit, foundation or endowment account, at the outset parties form a trusting relationship, promises are made, expectations are created, reliance and often complacency can take root, disappointments occur, communication wanes, account values continue to suffer, risks increase, prudence gaps manifest then arbitration claims or lawsuits are filed.

It’s best if we can be retained prior to the establishment of the new account (or new advisory) relationship to help prevent these types of situations  When lawsuits or claims are contemplated we prefer to be involved at the earliest opportunity prior to filing.

For concerns related to breach of fiduciary duty, self-dealing, conflict of interest or malfeasance or violations of FINRA or SEC securit

For more information contact us at or (310) 943-6509

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