ERISA §403(a)(2): (a) Except as provided in subsection (b), all assets of an employee benefit plan shall be held in trust by one or more trustees. Such trustee or trustees shall either be named in the trust instrument or in the plan instrument described in section 402(a) or appointed by a person who is a named fiduciary, and upon acceptance of being named or appointed, the trustee or trustees shall have exclusive authority and discretion to manage and control the assets of the plan, except to the extent that …
(2) Authority to manage, acquire, or dispose of assets of the plan is delegated to one or more investment managers pursuant to section 402(c)(3).
ERISA §404(a)(1)(B): … with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims.
ERISA §405(c)(1): The instrument under which a plan is maintained may expressly provide for procedures (A) for allocating fiduciary responsibilities (other than trustee functions) among named fiduciaries, and (B) for named fiduciaries to designate persons other than named fiduciaries to carry out fiduciary responsibilities (other than trustee responsibilities) under the plan ….
Marshall v. Glass/Metal Association and Glaziers and Glassworkers Pension Plan: A trustee’s lack of familiarity with investments is no excuse: under an objective standard, trustees are to be judged according to the standards of others acting in a like capacity and familiar with such matters.
Marshall v. Snyder: … the framers of §404(a)(1)(B) established a standard of conduct based on a measure of how a prudent man in a like capacity (administration of employee benefit plans) and familiar with such matters would act. Thus, ERISA’s prudence test is not that of a prudent layperson but rather that of a prudent fiduciary with experience dealing with a similar enterprise.
29 C.F.R. §2509.96-1(e): As with any designation of a service provider to a plan, the designation of a person(s) to provide investment education services or investment advice to plan participants and beneficiaries is an exercise of discretionary authority or control with respect to management of the plan; therefore, persons making the designation must act prudently and solely in the interests of the plan participants and beneficiaries, both in making the designation(s) and in continuing such designations(s).
UPIA §1: … [A] trustee who invests and manages trust assets owes a duty to the beneficiaries of the trust to comply with the prudent investor rule set forth in this [Act].
UPIA §5: A trustee shall invest and manage the trust assets solely in the interest of the beneficiaries.
UPIA §9(a)(1) ─ (2): The trustee shall exercise reasonable care, skill, and caution in:
(1) Selecting an agent, and
(2) Establishing the scope and terms of the delegation, consistent with the purposes and terms of the trust ….
UPMIFA §3(b): In addition to complying with the duty of loyalty imposed by law other than this [act], each person responsible for managing and investing an institutional fund shall manage and invest the fund in good faith and with the care an ordinarily prudent person in a like position would exercise under similar circumstances.
UPMIFA §4(a)(1-2): In making a determination to appropriate or accumulate, the institution shall act in good faith, with the care that an ordinarily prudent person in a like position would exercise under similar circumstances, and shall consider, if relevant, the following factors:
(1) The duration and preservation of the endowment fund; [and]
(2) The purposes of the institution and the endowment fund ….
UPMIFA §5(a): An institution shall act in good faith, with the care that an ordinarily prudent person in a like position would exercise under similar circumstances, in:
(1) Selecting an agent;
(2) Establishing the scope and terms of the delegation, consistent with the purposes of the institution and the institutional fund; and
(3) Periodically reviewing the agent’s actions in order to monitor the agent’s performance and compliance with the scope and terms of the delegation.
UMPERSA §6(b): The trustee or administrator shall exercise reasonable care, skill, and caution in:
(1) Selecting an agent, and
(2) Establishing the scope and terms of the delegation, consistent with the purposes and terms of the retirement program ….
UMPERSA §7(1-3): A trustee or other fiduciary shall discharge duties with respect to a retirement system:
(1) Solely in the interests of plan participants and beneficiaries;
(2) For the exclusive purpose of providing benefits to participants and beneficiaries…; and
(3) With the care, skill, and caution under the circumstances then prevailing which a prudent person acting in a like capacity and familiar with those matters would use in the conduct of an activity of like character and purpose ….
UMPERSA §7(6): [a] trustee or other fiduciary shall discharge duties with respect to a retirement system in accordance with a good-faith interpretation of the law governing the retirement program and system.
ERISA §402(a)(1): Every employee benefit plan shall be established and maintained pursuant to a written instrument.
ERISA §404(a)(1): … a fiduciary shall discharge his duties
(A) For the exclusive purpose of:
(i) Providing benefits to participants and their beneficiaries; and
(ii) Defraying reasonable expenses of administering the plan.
(B) With the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims;
(C) By diversifying the investments of the plan so as to minimize the risk of large losses, unless under the circumstances it is clearly prudent not to do so; and
(D) In accordance with the documents and instruments governing the plan, insofar as such documents and instruments are consistent with the provisions of this title and title IV.
ERISA §404(a)(1)(B): … appropriate consideration to those facts and circumstances that … the fiduciary knows or should know are relevant to the particular investment or investment course of action involved ….
UPIA §2(a): A trustee shall invest and manage trust assets as a prudent investor would, by considering the purposes, terms, distribution requirements, and other circumstances of the trust. In satisfying this standard, the trustee shall exercise reasonable care, skill, and caution.
UPIA §2(c) (Comments): [Factors a trustee should consider in investing and managing trust assets include]:
(1) General economic conditions;
(2) The possible effect of inflation or deflation;
(3) The expected tax consequences of investment decisions or strategies;
(4) The role that each investment or course of action plays within the overall trust portfolio …;
(5) The expected total return from income and the appreciation of capital;
(6) Other resources of the beneficiaries; and
(7) The needs for liquidity, regularity of income, and preservation or appreciation of Capital ….
UPIA §2(d): A trustee shall make a reasonable effort to verify facts relevant to the investment and management of trust assets.
UPIA in §4: “Duties at Inception of Trusteeship”: [w]ithin a reasonable time after receiving property, an institution shall make and carry out decisions concerning the retention or disposition of the property or to rebalance a portfolio, in order to bring the institutional fund into compliance with the purposes, terms, and distribution requirements of the institution as necessary to meet other circumstances of the institution and the requirements of this [act].
UPMIFA Prefacatory Note: When a donor expresses intent clearly in a written gift instrument, the Act requires that the charity follow the donor’s instructions. When a donor’s intent is not so expressed, UPMIFA directs the charity to spend an amount that is prudent, consistent with the purposes of the fund, relevant economic factors, and the donor’s intent that the fund continue in perpetuity. This approach allows the charity to give effect to donor intent, protect its endowment, ensure generational equity, and use the endowment to support the
purposes for which the endowment was created.
UPMIFA §3(b): A trustee shall invest and manage trust assets as a prudent investor would, by considering the purposes, terms, distribution requirements, and other circumstances of the trust. In satisfying this standard, the trustee shall exercise reasonable care, skill, and caution.
UPMIFA §3(c)(2): A trustee shall make a reasonable effort to verify facts relevant to the investment and management of trust assets.
UPMIFA §3(e)(1)(G): … the needs of the institution and the fund to make distributions and to preserve capital ….
UPMIFA §3(e)(5): [w]ithin a reasonable time after receiving property, an institution shall make and carry out decisions concerning the retention or disposition of the property or to rebalance a portfolio in order to bring the institutional funds into compliance with the purposes, terms, distribution requirements of the institution and the requirements of this [Act].
UMPERSA §7(1) and (2): A trustee or other fiduciary shall discharge duties with respect to a retirement system:
(1) Solely in the interest of the participants and beneficiaries; and
(2) For the exclusive purpose of providing benefits to participants and
Beneficiaries ….
UMPERSA §8(a)(1)(A-E): [In making decisions about investing and managing retirement assets, the trustee must consider such factors as]:
(A) General economic conditions;
(B) The possible effect of inflation or deflation;
(C) The role that each investment or course of action plays within the overall portfolio of
the retirement program or appropriate grouping of programs;
(D) The expected total return from income, and preservation and appreciation of capital;
and
(E) Needs for liquidity, regularity of income, and preservation or appreciation of capital.
Rule 2010 – Commercial honor
Rule 2010 – Communications
Rule 2020 – Anti-fraud
Rule 2267 – Investor education and protection
100-1: Defining the scope of the engagement
200-1: Determining a client’s personal and financial goals, needs and priorities
200-2: Obtaining quantitative information and documents