Opinion ID: 17522
Heading Depth: 4
Heading Rank: 1

Heading: Fiduciary Self-Dealing

Text: The Great Empire ESOP in early 1995 reabsorbed suspended shares in § 14(h) accounts, paying each account holder the value of his shares as of the December 31 preceding his separation from the Plan. According to Matassarin, the Plan effectively repurchased shares for less than the fair market value on the date of repurchase. Those who benefitted most from this repurchase, she continues, were (1) the Plan fiduciaries, who held the largest share accounts in the Plan; and (2) Lynch and Oatman, whose company, Great Empire, was able to avoid paying fair market value for the shares. Matassarin argues that these actions violated ERISA § 406(b), which prohibits fiduciary selfdealing.17 17. A fiduciary with respect to a plan shall not--
interest or for his own account, (2) in his individual or in any other capacity act in any transaction involving the plan on behalf of a party (or represent a party) whose interests are adverse to the interests of the plan or the interests of its participants or beneficiaries, or (3) receive any consideration for his own personal account from any party dealing with such plan in connection -31- We need not consider the claim in depth. Under § 502(a)(3), a beneficiary may bring an action to enjoin an ERISA violation or for equitable relief. In this case, Matassarin has nothing to enjoin and no equitable relief available to her on behalf of the Plan as a whole. The “repurchase” took place in 1995. The Plan as a whole did not suffer, and Matassarin’s individual segregated account was unaffected. Even if Matassarin’s § 406(b) allegations are meritorious, the only beneficiaries possibly entitled to relief would be the Plan participants who were allegedly offered less than fair value for the interests in their § 14(h) accounts.18 As we have stated, the district court did not abuse its discretion in finding Matassarin an inappropriate representative for a class that would include those Plan participants. Whereas Matassarin individually has no § 502(a)(3) relief available to her for § 406(b) violations, the district court properly denied her claim for breach of fiduciary duty.19 with a transaction involving the assets of the plan. 29 U.S.C. § 1106(b). 18. We make no finding here as to whether any separated Plan participant with a § 14(h) account would have a claim against the Plan fiduciaries. 19. We have not considered whether the duties set forth in § 406(b) necessarily apply in this ESOP situation. ERISA § 408(e) generally exempts ESOP fiduciaries from § 406 requirements when the questioned transaction involves the acquisition or sale of “qualifying employer securities,” which include stock. 29 U.S.C. § 1108(e); see 29 U.S.C. § 1107(d)(5)(A). Section 408(e) has been interpreted to allow “[a]n ESOP [to] acquire employer securities in circumstances that would otherwise violate Section 406 if the purchase is made for ‘adequate consideration.’” Donovan v. -32-