defendants in this case are fiduciaries of a six billion dollar participant directed retirement plan they did nothing when a five hundred million dollars investment option concentrated over thirty percent of its assets in one here was a shocking departure from the norm in holding otherwise the district court misconstrued plaintiff's allegations and result questions of fact at the pleading stage this court should reverse what to pay careful attention to the sequoia fund certainly this was a huge plan for and sophisticated investors that's at the s a c paragraph thirty seven this was an outlier mutual fund unlike most mutual funds that have hundreds of investments this had only a few it was of a type that's extremely popular for retirement investment actively managed domestic equity funds comprise about thirty one percent of retirement savings in this country and in fact this was an extremely popular option among plan participant attention how do we know that the way that we know that is that they did nothing as the sequoia fund became thirty two percent concentrated in one stock it was this would have been obvious to a casual observer independent research directors of  sequoia fund resigned in protest making national news in october of two thousand and fifteen prudent to do under these circumstances would not sit on their hands here they might have divested from the sequoia fund they might have stopped new allocations to the sequoia fund at a minimum they would have warned participants of the risks associated with investing in the sequoia fund as it was participants could have thought that the sequoia fund was the kind of default option that they could expect for most domestic equity mutual funds and in fact that that was how it was presented to participants that i'm not one tell me how it was how what the evidence is about how it was presented when i look at the plan documents they say this is this fund is kind of scott some risk we're going to we're going to try to invest in undervalued stocks and that's a risky business and this is a more how it did you know over the course of its this whole this whole debate about how the the fund was represented to participants this is really a dispute of the facts that we have alleged that the sequoia fund in fact held itself out as a value sequoia fund you know but my question is what did the plan represent to you it used to plan just said take a look at the documents so they didn't make an affirmative misrepresentation your argument is they should have paid more attention difficult time with your argument that they somehow represented to your to your putative clients that there was that this fund was better than it was i can't find that anywhere your honor they're all part and parcel of the same duty  you sure they're all part and parcel of and i'm looking for facts that support the misrepresentation side of your argument facts alleging either of your complaints or in the documents incorporated and i can't find them that's my that's my problem value fund and you don't have to believe me if you go on to sequoia fund's website today it's a has and i quote through multiple market cycles portfolio managers and generations of leadership the firm has managed the fund with a long term value oriented approach the district court simply discredited that those allegations at the pleading stage there in the complaint at fifty eight to which your allegation is really i take it that it's not that they've sequoia fund made  which looking at the annual statement would have sufficed here ok that the sequoia fund was thirty percent invested in one stock and that couldn't be sherry's would not have sat on their hands under those circumstances they would have taken some action to protect participants the fact that they did nothing is strong evidence both of the fact that they weren't paying any attention here and that that actually caused a loss to participants in this plan who had put their nest eggs in the sequoia fund under the  respond to that excellent track record five years of a one thousand percent increases in the funds returns by either moving the fund at that point because it become too risky they say or by telling them to spend so it's a coil was non diversified that it presented risks associated with a growth strategy but a risk does not require fiduciaries to time the market and to deny participants access to a successful fund the for the performance that fund turns out because or what about the concentration theory though that you do have an obligation to monitor i think you assume that i we are and i and i and from what your brief was i just but one issue or side of the house that you're not relying on so why doesn't that create at least a fact issue that allowing fund to get to over thirty percent you're violating your for sure duty to monitor a couple of points the question is whether the fact that it became concentrate because of performance and i think that's a critical background fact that's made clear in paragraph sixty nine of their complaint that makes clear that what happened in the find wasn't vestment invalid sequoyah was investment valiant in two thousand and ten when it was undervalued and then it remarkably well doesn't obviate your duty to monitor does it of course not nobody made off funds perform hundred percent before the markedly well until until they crash so so the question is are the facts alleged here which is that if you had a fund in which there was as jody boy said a thirty something percent concentration in one stock whenever it's performance put that aside for second who is one of those facts anough to give rise to an inference that you didn't do your clients didn't exercise their duty margaret the answer is no because what i want be very clear what the plaintiffs say is not generally want to fund goes up to thirty percent you have a duty to monitor it that wouldn't tell you anything  know that they weren't monitoring what they say is we have an inference that they weren't monitoring because they didn't take particular actions right that's what they say point of their brief or page twenty nine paragraph five one zero five of their complaint they say we can tell them what monitoring because any prudent producer would pull the fund out or would have changed the warning and told plaintiffs that there was this growth strategy going on in the fund and the problems with that are not either of those allegations support an inference that they weren't monitoring because first of all there's no basis for a duty to pull a successful find out before it goes south because we know clearly from didn't offer in this court's own opinion kwan anticipating a successfully performing fund and with thirty percent they've gone up to thirty percent because of the success doesn't tell you that they want you know the fact they didn't pull it out doesn't tell you they want monitoring it they just didn't pull out the successful fund at that point categories of kinds of claims where you can plead and get to discovery on inquiry into whether or not there's an actual breach of the duty to monitor you can't just leave something and say that could've been a failure my that's just a mere possibility right under twamley we know that's not up to categories that one is a case where you've got an actual demonstrably problem in the process you've got to demonstrably a conflict of interest you know you've got some sort of scandal and so it's the disney it's the disney  doesn't that big concentration why isn't that a red flag because the concentration itself isn't a problem in any sense it's not a substantive problem they tried a concentration there and they and their first complaint said that thirty percent violated the fun own concentration rule they abandoned it as we pointed out in a footnote in our brief in their second complaint because we showed it was just not true that it wasn't a violation the concentration policy because the concentration policy says you can't make an initial investment a purchase in stocks the goes up to more than twenty five percent of an industry sector it doesn't say and the f c c has never said that it's a violation or any kind of substantive problem to purchase a stock remember when they purchased sequoia purchased valient it was eight percent of the holdings no problems there and then it did well it just kept doing well thousand percent increase of the next five years that's what the concentration resulted from the f c c doesn't say that's a problem i p s doesn't say it's a problem own government documents don't be a problem it's perfectly fine to have a successful investment and no requirement under the securities laws or under risk for a risk of a douche or a to say you succeeded too much now i'm required as a matter of law to pull out of the lineup because somehow it you know it could go south that's what didn't hoffer says producers don't have a duty to do is there an allegation in this case i didn't see it but i want to make sure i'm right that the the t the fund breached the duty by not pulling out soon enough and when the stocks when the fun started going down that was certainly the first complex right and i'm wondering is that in the second complete detail it's not clear they say it's not but they do say in the briefcase thirty two thirty three thirty four that the fund became too risky quote unquote too risky because there was a point in time when you when somebody's looking at this would say oh my god there's a problem it's going down but what's going down right here is they're saying that the breach occurred in september before it went point indeed this is a post a long term investment and the courts after court said you can ride out you know and flows in the stock performance so there allegation is that they should have pulled out in september of two thousand and three as it was going as it was reaching peak yeah like one was around it course the court issues the basic holding of didn't offer which is that a diversified do share is entitled to rely on the market prices actually catch accurately capturing the value of the stock including its risk risk is priced into the value of the stock disclosure disclose of the possibility of investment in a growth securities that succeeds start with the first words the first words are domestic equity large blend it's not described as a value fund it's described as a large it does  beer as your colleague points out it does use the words value fairly often so would they would it ordinary investor reasonable investor look at this think it was being represented as a value fund i guess is there that's their position what's wrong with that but i think a number of things wrong with that first of all if you look at the whole of the disclosure over and over again it refers to the risks of growth stocks over and over again a growth strategy this funding it's telling the artists and this fund encompasses the kind of risks you would experience in a fund that invests in growth securities that it's explicit in again every relevant aspect of the disclosure includes that kind of that kind of disclosure  the second point though is there's nothing as a matter of law talismanic about saying value versus growth these are not on off switches that something is true or not true it's not a value fund one day and then because one of the investments performs  never have the kind of risk present in the growth fund nor is there anything other in the proof in the s p d or the prospectus that says if one of our value investments perform so well and we get to twenty five percent thirty percent expected the sequoia fund to be that alternative option not a growth option but if there was any confusion the prospectus again which the s p references says the balance sheets and earnings history and prospects of each company are extensively studied to appraise fundamental about that is a value fund disclosure that's what the sequoia fund is all about it's one of the most famous value funds in history well what do you say to mr hackers argument that i think you saying that this fund what this is the stock value went up a thousand percent and everybody made lots of money is there is there at some point you should have said when i was twenty five percent concentration and i've gone up six hundred percent now we have to pull out or is it when it gets to twenty eight percent concentration now we have to but you know when you make such a good investment that it becomes so concentrated would you be  liable if they are oblivious to risk and that's what happened here judge posner's well reasoned opinion in the armstrong case i think is instructive there he says risk a trustee who simply ignores changed circumstances and increased the risk loss to the trust beneficiaries is imprudent that's that's exactly what happened here no matter how it became that concentrated it became so concentrated and increased the risk of loss to the plan and to expend officiers so i'm still let's just let's assume that i'm a prudent for do sherry and i'm monitoring this fun and it becomes this concentrated what am i required to do i think that's a fact question in most cases so is that they didn't pull out of the funder make an affirmative disclosure for all we know from this record this is why they do not offer such a terrible decision but you're stuck with or we know from this record is that there's no affirmative evidence that that's that's not a high burden that's a burden that we expect mom and pop plans to meet and that they regularly meet in fact if you affirm the decision below here you're effectively encouraging smaller plans and plans like the disney plan here to ignore plan options as long as they're publicly traded and their own disclosures are not affirmatively misleading or fraudulent that can't be the standard must be the case that the duty of prudence has content other than looking at the stock price and the returns of on that investment