New Type of ERISA Litigation — Collective Investment Trust Litigation — Is Just the Tip of the Iceberg

Move over stock drop case and excessive fee cases. New to the litigation landscape are claims of breach of fiduciary duty in the mismanagement of collective investment trusts. Popular because they are exempt from SEC oversight and the Investment Company Act of 1940 (if bank-maintained), these vehicles nonetheless are in the sights of plaintiff's counsel, who call this area the "tip of the iceberg."

As ERISA fiduciaries, managers of these plans must discharge their duties solely in the interest of plan participants and beneficiaries. The managers must act prudently, must diversify plan investments, and must make accurate disclosures regarding investment products and other matters, among other requirements.

The dramatic changes in the mortgage and housing markets already have led to increased litigation against managers under ERISA as well as a number of investigations by the Department of Labor.