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LEGAL DISCLAIMER:
Information contained in this publication is not legal advice, and
should not be construed as legal advice. If you need legal advice upon which you can rely,
you should seek a legal opinion from your attorney.
2
Trustees of employee benefit plans should make efforts to determine if
their plan had money invested with the Madoff firm and follow through
with the suggestions contained in the DOL guidance in order to fulfill their
fiduciary duties.
The DOL guidance is available at:
and is reproduced below in its
entirety.
STATEMENT OF EMPLOYEE BENEFITS SECURITY ADMINISTRATION
“DUTIES OF FIDUCIARIES IN LIGHT OF RECENT EVENTS REGARDING
BERNARD L. MADOFF INVESTMENT SECURITIES LLC”
Recent events regarding Bernard L. Madoff Investment Securities LLC have resulted
in fiduciaries, investment managers and other investment service providers asking
the Department of Labor about steps they should be taking in connection with
employee benefit plans they believe may have exposure to losses as a result of plan
assets being invested with Madoff entities. Fiduciaries of employee benefit plans
covered by the Employee Retirement Income Security Act of 1974 (ERISA) should
address these events in a manner consistent with their fiduciary duties of prudence
and loyalty to the plan’s participants and beneficiaries.
Where plan fiduciaries determine that plan assets were invested with Madoff
entities and material losses are likely, appropriate steps should be taken to assess
and protect the interests of the plan and its participants and beneficiaries. Such
steps may include (1) requesting disclosures from investment managers, fund
managers and other investment intermediaries regarding the plan’s potential
exposure to Madoff-related losses;
(2) seeking advice regarding the likelihood of
losses due to investments that may be at risk; (3) making appropriate disclosures
to other plan fiduciaries and plan participants and beneficiaries; and (4) considering
whether the plan has claims that are reasonably likely to lead to recovery of
Madoff-related losses that should be asserted against responsible fiduciaries or
other intermediaries who placed plan assets with Madoff entities, as well as claims
against the Madoff bankruptcy estate. Fiduciaries must ensure that claims are filed
in accordance with applicable
filing deadlines such as those applicable to
bankruptcy claims and for coverage by the Securities Investor Protection
Corporation (SIPC).
The website of the court-appointed trustee for the liquidation of Bernard L. Madoff
Investment Securities LLC is www.madofftrustee.com. This website contains the
liquidation notice, claim forms and related claims information, and deadlines for the
filing of claims with the trustee.
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As we go to press, the PBGC also released guidance on the subject. The
PBGC
guidance is available at: http://www.pbgc.gov/media/news-archive/news-