Court Opinion

ID: 8412142
Source: CourtListenerOpinion
Date Created: 2022-11-02 19:23:40.189064+00
Date Added: 2024-06-11T16:47:55.642937
License: Public Domain

STRAUB, Circuit Judge,
concurring in part and dissenting in part:
The August 2007 collapse of the $2 trillion subprime1 mortgage market unleashed “a global contagion,”2 the virulence of which is well demonstrated by plaintiffs’ allegations in this case.
Plaintiffs are current and former employees of Citigroup who invested years of savings in their employer’s retirement Plans. They did so at the cajoling of Citigroup and the other named defendants, who, according to plaintiffs, repeatedly and materially misrepresented Citigroup’s dismal financial outlook and its massive sub-prime exposure. Defendants allegedly knew or should have known that Citigroup stock was an imprudent investment, but nonetheless permitted and encouraged the Plans to hold and to acquire billions of dollars in Citigroup stock. As Citigroup’s “dire financial condition was revealed,” its price per share declined by over 74% in a little over one year — a loss in market value of over $200 billion. Compl. ¶ 175. According to plaintiffs, their retirement Plans suffered enormous losses during the relevant time period.
Today’s majority opinion ensures that such losses will go remediless. It thus represents both an alarming dilution of the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1001 et seq., and a windfall for fiduciaries, who may now avail themselves of the corporate benefits of employee stock ownership plans (“ESOPs”) without being burdened by the costs of complying with the statutorily mandated obligation of prudence.
In affirming the District Court’s dismissal of plaintiffs’ Prudence Claim, the majority holds that defendants’ decisions to invest in employer stock are entitled to a presumption of prudence. According to *147the majority, plaintiffs can overcome the presumption only through allegations, accepted as true, that would establish that the employer was in a “dire situation.” Maj. Op. at 140 (internal quotations omitted). Such arbitrary line-drawing leaves employees wholly unprotected from fiduciaries’ careless decisions to invest in employer securities so long as the employer’s “situation” is just shy of “dire” — a standard that the majority neglects to define in any meaningful way. But the duty of prudence does not wax and wane depending on circumstance; ERISA fiduciaries must act prudently at all times, and those who are derelict must be subject to accountability. Because I find no justification for cloaking fiduciaries’ investment decisions in a mantle of presumptive prudence, I must respectfully dissent.
The majority next affirms the District Court’s dismissal of plaintiffs’ Communication Claim. Because I find the Communication Claim to be adequately stated, I dissent from this holding as well.
The majority also affirms the dismissal of Counts III (failure to monitor), IV (failure to disclose information to co-fiduciaries), and VI (co-fiduciary liability) for the same reasons it affirmed the dismissal of the Prudence and Communication Claims. Because I conclude that dismissal of the Prudence and Communication Claims was improper, I also dissent with respect to Counts III, IV, and VI.
Finally, the majority affirms the dismissal of Count V, in which plaintiffs allege that all defendants breached their duty to avoid conflicts of interest by receiving compensation tied to the performance of Citigroup stock. I agree that this claim was properly dismissed. I thus join the majority for this part of the opinion only.

I. Evidence Claim

The majority affirms the District Court’s dismissal of plaintiffs’ Prudence Claim, in which plaintiffs allege (a) that the Investment Committee, the Administration Committee, Citigroup, and Citibank knew or should have known that Citigroup stock was an imprudent investment; and (b) that the foregoing defendants thus breached their fiduciary duties by, among other things, continuing to offer as an investment option the Citigroup Common Stock Fund (the “Fund”), which consisted mostly of Citigroup common stock.
I conclude that plaintiffs’ allegations are sufficient to state a claim against the Investment and Administration Committees for breach of the duty of prudence. I thus respectfully dissent.
A. Moench-Tgpe Deference Should Not Apply
The District Court concluded that defendants, in offering the Fund to Plan participants as an investment option, were entitled to a presumption that they did so prudently. In re Citigroup ERISA Litig., No. 07 Civ. 9790, 2009 WL 2762708, at *1, 15-19 (S.D.N.Y. Aug. 31, 2009). By upholding this ruling, the majority aligns our Court with those that have embraced the doctrine articulated in Moench v. Robertson, 62 F.3d 553, 571 (3d Cir.1995), cert. denied, 516 U.S. 1115, 116 S.Ct. 917, 133 L.Ed.2d 847 (1996). See, e.g., Quan v. Computer Scis. Corp., 623 F.3d 870, 881 (9th Cir.2010); Kirschbaum v. Reliant Energy, Inc., 526 F.3d 243, 254 (5th Cir.2008); Kuper v. Iovenko, 66 F.3d 1447, 1459 (6th Cir.1995).
Because I find the underpinnings of the Moench presumption to be fundamentally unsound, I decline the invitation to adopt it as a rule of law in our Circuit. As a practical matter, Moench-type deference to the investment decisions of an ESOP *148fiduciary renders moot ERISA’s “prudent man” standard of conduct, 29 U.S.C. § 1104(a)(1). Of course, policy concerns sometimes justify divergence between standards of conduct — in other words, how actors should conduct themselves — and standards of review — in other words, the manner in which courts evaluate whether challenged conduct gives rise to liability. But in my view, the policy concerns underlying the Moench decision warrant no such divergence. I would preserve the statutorily mandated standard of prudence by calling for plenary, rather than deferential, review of an ESOP fiduciary’s investment decisions.

1. ERISA’s Prudent Man Standard of Conduct

ERISA was designed to ensure “the continued well-being and security of millions of employees and their dependents” through the regulation of employee benefit plans. See 29 U.S.C. § 1001(a). See also Varity Corp. v. Howe, 516 U.S. 489, 496, 116 S.Ct. 1065, 134 L.Ed.2d 130 (1996). The statute thus imposes stringent standards of conduct upon fiduciaries who oversee such plans. See 29 U.S.C. § 1001(b). Indeed, we have said that ERISA’s fiduciary standards of conduct are “ ‘the highest known to the law.’ ” LaScala v. Scrufari, 479 F.3d 213, 219 (2d Cir.2007) (quoting Donovan v. Bierwirth, 680 F.2d 263, 272 n. 8 (2d Cir.), cert. denied, 459 U.S. 1069, 103 S.Ct. 488, 74 L.Ed.2d 631 (1982)). Of particular relevance here is the ERISA fiduciary’s duty to act in accordance with the “prudent man” standard of conduct — that is, “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.” 29 U.S.C. § 1104(a)(1)(B). Although this standard is rooted in the common law of trusts, ERISA’s standard is “more exacting.” Donovan v. Mazzola, 716 F.2d 1226, 1231 (9th Cir.1983).
ERISA allows for the creation of ESOPs, which are “designed to invest primarily in qualifying employer securities.” 29 U.S.C. § 1107(d)(6)(A). To fulfill this purpose, ESOP fiduciaries are exempt from certain standards of conduct that apply to other kinds of ERISA plans. For example, although fiduciaries of pension benefit plans generally must diversify investments so as to minimize risk, see id. § 1104(a)(1)(C), ESOP fiduciaries need not do so. Specifically, section 404(a)(2) of ERISA provides that “the diversification requirement ... and the prudence requirement (only to the extent that it requires diversification) ... is not violated by acquisition or holding of ... qualifying employer securities.” Id. § 1104(a)(2). ESOP fiduciaries are also exempted from ERISA’s prohibition against dealing with a party in interest. Id. § 1106(b)(1). But they are not otherwise excused from the stringent “prudent man” standard that governs fiduciary conduct under typical ERISA plans. See, e.g., Quan, 623 F.3d at 878; Moench, 62 F.3d at 569; Fink v. Nat’l Sav. & Trust Co., 772 F.2d 951, 955 (D.C.Cir.1985).

2. Policy Justiñcations for Deferential Standards of Review

Whether a standard of conduct — such as ERISA’s “prudent man” standard — is judicially enforced turns on the standard of review used to test the legality of the conduct at issue. In many contexts, the two standards are aligned. For instance, “the standard of conduct that governs automobile drivers is that they should drive carefully, and the standard of review in a liability claim against a driver is whether he drove carefully.” Melvin Aron Eisen*149berg, The Divergence of Standards of Conduct and Standards of Review in Corporate Law, 62 Fordham L.Rev. 437, 437 (1993) (internal footnote omitted). In such instances, the governing standard of conduct retains its bite.
In other areas of the law, however, “prudential judgment” counsels in favor of adopting a standard of review that is more lenient than the applicable standard of conduct. See id. Corporate law provides a useful example. As a normative matter, directors of a corporation are generally expected to perform their functions in good faith, and with the degree of care that an ordinarily prudent person in a like position would use under similar circumstances. See, e.g., N.Y. Bus. Corp. Law § 717(a). This standard of conduct is “fairly demanding,” but the standard of review used to test whether directors are liable for violating the duty of due care is “less stringent.” See Eisenberg, supra, at 441. Under the business judgment rule, directors are entitled to a presumption that, in making a business decision, they acted on an informed basis, in good faith, and in the honest belief that the action taken was in the best interests of the company. See, e.g., Dist. Lodge 26, Int’l Ass’n of Machinists & Aerospace Workers, AFL-CIO v. United Techs. Corp., 610 F.3d 44, 52 (2d Cir.2010).
Considerations of “fairness and policy” led to the adoption of this deferential standard. Eisenberg, supra, at 443. Business judgments are often “made on the basis of incomplete information and in the face of obvious risks.” Id. at 444. A reasonableness standard of review could thus discourage directors from making “bold but desirable decisions,” and might even deter directors from serving at all. Id. In addition, “courts are ill-equipped to determine after the fact whether a particular business decision was reasonable” under the circumstances. William T. Allen, Jack B. Jacobs & Leo E. Strine, Jr., Realigning the Standard of Review of Director Due Care with Delaware Public Policy: A Critique o/Van Gorkom and its Progeny as a Standard of Review Problem, 96 Nw. U.L.Rev. 449, 452 (2002). Examining directors’ decisions under a standard of review that is more lenient than the relevant standard of conduct thus “furthers important public policy values.” Id. at 449.

3. Policy Considerations Do Not Warrant Deferential Review of ESOP Fiduciaries’ Investment Decisions

I am not persuaded that considerations of public policy require Moench-type deference to the investment decisions of ESOP fiduciaries, which results in an emasculation of ERISA’s “prudent man” standard of conduct.
a. The Moench Court’s Policy Considerations
The named plaintiff in Moench alleged that the fiduciaries of his ESOP breached ERISA standards of conduct by continuing to invest in employer stock despite the deterioration of the employer’s financial condition. See Moench, 62 F.3d at 558-59. For our purposes, the issue in Moench was what standard of review is appropriate to test the fiduciaries’ liability for their investment decisions. See id. at 568. See also Edgar v. Avaya, Inc., 503 F.3d 340, 346 (3d Cir.2007).
To answer this question, the Moench court first considered the special status of ESOPs under ERISA. Moench, 62 F.3d at 568. Specifically, the court noted that ESOP fiduciaries are exempt from ERISA’s duty to diversify, and from the statute’s prohibition against dealing with a party in interest. Id. (discussing the exemptions under 29 U.S.C. §§ 1104(a)(2) and 1108(b)(1).) The court explained that *150these exemptions “arise[] out of the nature and purpose of ESOPs themselves,” id., which is “to ‘invest primarily in qualifying employer securities,’ ” Edgar, 503 F.3d at 346 (quoting 29 U.S.C. § 1107(d)(6)(A)). That ESOPs are undiversified means that they place participants’ retirement assets “at much greater risk” than other ERISA plans. Moench, 62 F.3d at 568 (internal quotations omitted). But Congress did not intend ESOPs to guarantee retirement benefits. Id. Rather, Congress intended that ESOPs would function as both employee retirement benefit plans and as a “technique of corporate finance that would encourage employee ownership.” Id. at 569 (internal quotations omitted). Notwithstanding ESOPs’ unique status, the Moench court emphasized that ESOP fiduciaries are still required to act in accordance .with ERISA’s standards of prudence and loyalty. See Moench, 62 F.3d at 569; see also Edgar, 503 F.3d at 346.
According to the Moench court, the appropriate standard of review was thus one that would preserve a balance between, on the one hand, the goals of ESOPs, and on the other, ERISA’s stringent fiduciary duties. In short, the appropriate standard of review would ensure that “competent fiduciaries” would not be deterred from service, and “unscrupulous ones” would not be given “license to steal.” Moench, 62 F.3d at 569 (internal quotations omitted).
The court rejected plenary review as destructive of such balancing. See id. at 570. The court reasoned that “strict judicial scrutiny” of fiduciaries’ investment decisions “would render meaningless the ERISA provision excepting ESOPs from the duty to diversify.” Id. In addition, the court feared that plenary review “would risk transforming ESOPs into ordinary pension benefit plans,” which would frustrate Congress’s desire to facilitate employee ownership. Id. “After all,” the court asked, “why would an employer establish an ESOP if its compliance with the purpose and terms of the plan could subject it to strict judicial second-guessing?” Id. Finally, the court looked to the common law of trusts, which requires that interpretation of trust terms be controlled by the settlor’s intent. Moench v. Robertson, 62 F.3d 553, 570 (3d Cir.1995). “That principle is not well served in the long run by ignoring the general intent behind such plans in favor of giving beneficiaries the maximum opportunities to recover their losses.” Id.
To fashion the appropriate standard of review, the court again found guidance in the common law of trusts. See id. at 571. According to Moench, where a trust instrument “requires” the trustee to invest in a particular stock, the trustee is generally “immune from judicial inquiry,” id., see also Edgar, 503 F.3d at 346, but where the instrument merely “permits” a particular investment, trust law calls for plenary review of the investment decision, id. The fiduciaries in Moench were not “required” to invest in employer securities, but they were “more than simply permitted to make such investments.” Moench, 62 F.3d at 571. The court therefore determined that an “intermediate abuse of discretion standard would strike the appropriate balance between immunity from judicial review, at one extreme, and de novo review, at the other.” Edgar, 503 F.3d at 347; see also Moench, 62 F.3d at 571 (“[T]he most logical result is that the fiduciary’s decision to continue investing in employer securities should be reviewed for an abuse of discretion.”).
Pursuant to this deferential review, an ESOP fiduciary who invests plan assets in employer stock “is entitled to a presumption that it acted consistently with ERISA *151by virtue of that decision. However, the plaintiff may overcome that presumption by establishing that the fiduciary abused its discretion by investing in employer securities.” Moench, 62 F.3d at 571. To do so, plaintiffs must show that the fiduciaries “could not have believed reasonably that continued adherence to the ESOP’s direction was in keeping with the settlor’s expectations of how a prudent trustee would operate.” Id. Thus, plaintiffs may introduce evidence to the effect that, “owing to circumstances not known to the settlor and not anticipated by him,” investing in employer securities “would defeat or substantially impair the accomplishment of the purposes of the trust.”3 Id. (internal quotations omitted).
b. The Moench Court’s Policy Considerations Are Insufficient to Justify Adopting Deferential Review
The question remains whether the policy concerns articulated in Moench — and reiterated by the majority here — warrant our adoption of a standard of review that is more lenient than ERISA’s “prudent man” standard of conduct. I answer that question in the negative.
i. Moench Deference Does Not Appropriately Balance ERISA’s Competing Values
In my view, the Moench presumption strikes no acceptable “accommodation,” (Maj. Op. at 138), between the competing ERISA values of protecting employees’ retirement assets and encouraging investment in employer stock. The majority favorably cites to decisions that note that the Moench presumption “would be difficult to rebut,”4 and that refer to the presumption as a “substantial shield”5 to fiduciary liability. As these authorities implicitly acknowledge, the Moench presumption precludes, in the ordinary course, judicial enforcement of the prudent man standard of conduct. In a case that was argued in tandem with the instant matter,6 the Secretary of Labor noted that the Moench presumption relegates the duty of prudence to protecting employees only “from the complete loss of their assets in the wake of a company’s collapse,” thereby “leaving them otherwise unprotected from the careless management of plan assets.” Brief for the Secretary of Labor as Amicus Curiae Supporting Plaintiffs-Appellants, Gearren v. McGraw-Hill Cos., (2d Cir. June 4, 2010) (No. 10-792-ev), 2010 WL 2601687, at *20. This cannot be what Congress envisioned when it enacted ERISA. Cf. ILGWU Nat’l Ret. Fund v. Levy Bros. Frocks, Inc., 846 F.2d 879, 885 (2d Cir.1988) (citing IUE AFL-CIO Pension Fund v. Barker & Williamson, Inc., 788 F.2d 118, 127 (3d Cir.1986) for the proposition that ERISA, as a remedial statute, “should be liberally construed in favor of protecting the participants in employee benefits plans” (internal quotations omitted)). “ERISA is paternalistic,” Van Boxel v. Journal Co. Emps.’ Pension Trust, 836 F.2d 1048, 1052 (7th Cir.1987), and it is thus incongruous to deny *152participants meaningful judicial review on the theory that investment in employer stock should be encouraged.
The statutory structure further demonstrates the impropriety of Moench’s “accommodation.” ESOPs are merely one type of benefit plan under the broader ERISA framework. That they are exempt from certain of ERISA’s standards of conduct does not mean that the policies favoring ESOPs should override the policies of ERISA. Indeed, when a general statutory policy is qualified by an exception, courts generally read “ ‘the exception narrowly in order to preserve the primary operation of the [policy].’ ” John Hancock Mut. Life Ins. Co. v. Harris Trust & Sav. Bank, 510 U.S. 86, 97, 114 S.Ct. 517, 126 L.Ed.2d 524 (1993) (parenthetically quoting Comm’r of Internal Revenue v. Clark, 489 U.S. 726, 739-40, 109 S.Ct. 1455, 103 L.Ed.2d 753 (1989)). Accordingly, the investment decisions of ESOP fiduciaries must be “subject to the closest scrutiny under the prudent person rule, in spite of the strong policy and preference in favor of investment in employer stock.” Fink v. Nat’l Sav. & Trust Co., 772 F.2d 951, 955-56 (D.C.Cir.1985) (internal quotations omitted); see also Eaves v. Penn, 587 F.2d 453, 460 (10th Cir.1978) (“ESOP fiduciaries are subject to the same fiduciary standards as any other fiduciary except to the extent that the standards require diversification of investments.”).
Had Congress intended to accommodate ERISA’s competing values by requiring deferential review of ESOP fiduciaries’ decisions, it could have provided for that result. See, e.g., 5 U.S.C. § 706(2)(A) (Administrative Procedure Act) (establishing a deferential standard of review over agency determinations).
ii. Plenary Review Would Not Deter ESOP Formation
I further reject the Moench court’s assertion, echoed by the majority here, that plenary review of a fiduciary’s investment decisions would spell doomsday for the ESOP institution. See Moench, 62 F.3d at 570; Maj. Op. at 139. ESOPs (under ERISA) had been in existence for more than twenty years before the Court of Appeals for the Third Circuit issued its decision in Moench. I have seen no evidence that plenary review during that time or thereafter7 resulted in ESOP termination, or deterred ESOP formation. ESOP growth apparently slowed in the early 1990s. But commentators (including the ESOP Association, an amicus here) attribute the subsidence to legislative and market factors — not to fiduciaries’ fears of being subjected to a particular brand of judicial review.8
The Moench court questioned why an employer would “establish an ESOP if its compliance with the purpose and terms of the plan could subject it to strict judicial second-guessing[.]” Moench, 62 F.3d at 570. But the incentives for ESOP creation *153are well documented. First, corporations often establish ESOPs to help raise funds, which can then be used, for example, to provide working capital or to buy out large shareholders. See Michael E. Murphy, The ESOP at Thirty: A Democratic Perspective, 41 Willamette L.Rev. 655, 664 (2005). Second, ESOPs confer significant tax advantages on employers.9 Third, employers use ESOPs to accomplish various business objectives, including management entrenchment (by placing large amounts of stock in friendly hands), and avoiding hostile takeovers (by purchasing publicly held shares of employer stock as a defensive measure). See Aditi Bagchi, Varieties of Employee Ownership: Some Unintended Consequences of Corporate Law and Labor Law, 10 U. Pa. J. Bus. & Emp. L. 305, 317 (2008).
In light of these, and other incentives, some commentators note that ESOPs have “been used more to the advantage of the firm than its employees.” Id. at 316 (internal quotations omitted). I thus find implausible the suggestion that plenary review of fiduciaries’ investment decisions would suddenly deter ESOP formation or lead to widespread plan termination.
iii. Plenary Review Would Not Render ESOP Fiduciaries “Guarantors”
I also disagree with the contention that plenary review of the prudence of fiduciaries’ investment decisions would transform fiduciaries into “virtual guarantors of the financial success of the [ESOP],” Moench, 62 F.3d at 570 (alteration in original) (internal quotations omitted); see also Maj. Op. at 138 (stating that absent deferential review, “fiduciaries would be equally vulnerable to suit either for not selling if they adhered to the plan’s terms and the company stock decreased in value, or for deviating from the plan by selling if the stock later increased in value”).
The foregoing arguments misperceive the nature of the prudence inquiry, and the effect of plenary review. The test of prudence is one of conduct, not results. See Bunch v. W.R. Grace & Co., 555 F.3d 1, 7-8 (1st Cir.2009). Accordingly, whether a fiduciary acted prudently at the time he engaged in a challenged transaction turns on whether he “employed the appropriate methods to investigate the merits of the investment.” Flanigan v. Gen. Elec. Co., 242 F.3d 78, 86 (2d Cir.2001) (internal quotations omitted). A fiduciary who discharges his duty of prudence will not be liable merely because the investment ultimately fails, see DiFelice v. U.S. Airways Inc., 497 F.3d 410, 424 (4th Cir.2007), just as a surgeon who abides by the applicable standard of care will not be liable in negligence merely because his patient expires on the operating table. In short, the duty of prudence — which is concerned with conduct — does not require a fiduciary to become a guarantor — who is concerned with results. See DeBruyne v. Equitable Life Assurance Soc’y of the U.S., 920 F.2d 457, 465 (7th Cir.1990). Plenary review could not possibly alter that dichotomy, because the basis for liability is a breach of the duty of prudence, which is not a “guarantee but a standard of conduct that Congress imposed and that the fiduciary can *154satisfy by acting reasonably.” Roth v. Sawyer-Cleator Lumber Co., 16 F.3d 915, 920 (8th Cir.1994).

iv. Plenary Review Would Not Render Meaningless ESOPs’ Exemption From The Duty To Diversify

I further disagree with the contention that plenary review of fiduciaries’ investment decisions would read the diversification exemption out of ERISA. See Moench v. Robertson, 62 F.3d 553, 570 (3d Cir.1995). As previously noted, ERISA provides that “the diversification requirement ... and the prudence requirement (only to the extent that it requires diversification ) ... is not violated by acquisition or holding of ... qualifying employer securities.” 29 U.S.C. § 1104(a)(2) (emphasis added). The exemption thus allows ESOP fiduciaries to be “released from certain per se violations on investments in employer securities.” Eaves, 587 F.2d at 459.
Of course, the absence of a general diversification duty from the ESOP setting does not eliminate fiduciaries’ duty of prudence. See 29 U.S.C. § 1104(a)(2); Armstrong v. LaSalle Bank Nat’l Ass’n, 446 F.3d 728, 732 (7th Cir.2006). An ESOP fiduciary may invest plan assets in employer securities so long as it remains prudent to do so. See id. And plenary review of that question — i.e., of the prudence of a fiduciary’s investment decisions — simply has no impact on the continued viability of ESOPs’ statutory exemption from per se liability for the failure to diversify. The Secretary of Labor, in her amicus brief, explains the distinction well:
The plaintiffs here ... do not base their claims on the failure to diversify holdings of an otherwise prudent investment. Instead, they assert that the market was being misled to overvalue the stock, and that the plan’s fiduciaries continued to purchase and hold the stock anyway. Diversification is not the issue; it was imprudent for the fiduciaries to knowingly buy even a single share at an inflated price.
Brief for the Secretary of Labor as Amicus Curiae Supporting Plaintiffs-Appellants, In re Citigroup ERISA Litig., (2d Cir. Dec. 28, 2009) (No. 09-3804-cv), 2009 WL 7768350, at *15 n. 2.
In other words, although in the ESOP context there is no duty to diversify as such, there is still a duty of prudence. “And in particular cases,” the duty of prudence “might ... become a duty to diversify, even though failure to diversify an ESOP’s assets is not imprudence per se.” Steinman v. Hicks, 352 F.3d 1101, 1106 (7th Cir.2003) (emphasis added). Accordingly, whether courts evaluate the prudence of fiduciaries’ conduct under plenary review does not endanger ESOPs’ statutory exemption from per se liability for the failure to diversify.

4. Summary

In sum, I cannot join in the majority’s adoption of the Moench presumption, which is premised on indefensible policy concerns, and which, contrary to the congressionally enacted purposes of the Employee Retirement Income Security Act, greatly imperils the security of employees’ retirement incomes.
Because I decline to adopt the presumption, I need not opine on its application to this case. Instead, I would hold that the sufficiency of plaintiffs’ Prudence Claim must be evaluated under plenary review. I now undertake that evaluation.

B. The District Court Erred In Dismissing Plaintiffs’ Prudence Claim

1. Applicable Law

To state a claim for breach of fiduciary duty under ERISA, plaintiffs must ade*155quately allege that defendants were plan fiduciaries who, while acting in that capacity, engaged in conduct constituting a breach of fiduciary duty under ERISA. See 29 U.S.C. § 1109; Pegram v. Herdrich, 530 U.S. 211, 222-24, 120 S.Ct. 2143, 147 L.Ed.2d 164 (2000). I agree with the majority that plaintiffs sufficiently alleged that the Investment Committee and the Administration Committee were ERISA fiduciaries with respect to plaintiffs’ ability to invest through the Plans in Citigroup stock. Accordingly, I turn now to whether plaintiffs’ allegations, accepted as true, would render it plausible that these defendants, acting in their fiduciary capacities, breached any ERISA-imposed responsibilities, obligations or duties.
As previously noted, an ERISA fiduciary must discharge his duties “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.” 29 U.S.C. § 1104(a)(1)(B).
The court’s task in evaluating fiduciary compliance with the prudent man standard is to inquire “whether the individual [fiduciary], at the time [he] engaged in the challenged transactions, employed the appropriate methods to investigate the merits of the investment and to structure the investment.” Flanigan, 242 F.3d at 86 (internal quotations omitted). The question is thus whether the fiduciary acted “reasonably” in light of the facts of which he knew or should have known at the time he engaged in the challenged transaction. See Roth, 16 F.3d at 920. “A [fiduciary] who simply ignores changed circumstances that have increased the risk of loss to the trust’s beneficiaries is imprudent.” Armstrong, 446 F.3d at 734.

2. Application of Law to Facts

I would hold that plaintiffs have stated a claim against the Investment and Administration Committees for breach of the duty of prudence.
Plaintiffs’ allegations, if true, render it plausible that the Investment and Administration Committees knew about Citigroup’s massive subprime exposure. To see why this is so, we must briefly examine (a) plaintiffs’ allegations regarding the responsibilities (and membership) of the Investment and Administration Committees, and (b) the broader context of the sub-prime crisis, as well as Citigroup’s prominent role in it.
Pursuant to Plan documents, the Administration Committee was charged with managing the operation and administration of the Plans. The Plans also delegated to the Administration Committee the authority to impose certain restrictions on participants’ investment selections. Meanwhile, the Plan documents charged the Investment Committee with, among other things, selecting and monitoring investment options for the Plans; it “had the discretion and authority to suspend, eliminate, or reduce any Plan investment, including investments in Citigroup stock.” Compl. ¶ 69. Plaintiffs explicitly allege that the Investment Committee “regularly exercised its authority to suspend, eliminate, reduce, or restructure Plan investments.” Id. Given plaintiffs’ allegation that, as of 2008, Citigroup was the largest bank in the world in terms of revenue, we may reasonably infer (a) that Citigroup appointed relatively sophisticated businesspersons to staff the Investment Committee (as well as the Administration Committee); and (b) that such relatively sophisticated Investment Committee members would have had at least a basic knowledge of current events and market trends, especially inso*156far as they related to the selection and monitoring of Plan investments.
Plaintiffs’ Complaint contains detailed allegations regarding the growth of sub-prime lending and Citigroup’s ill-fated entry into the subprime marketplace. By 2006 and 2007, reports of an incipient sub-prime meltdown began to appear in the Wall Street Journal, the New York Times, the Financial Times, Bloomberg News, and Reuters. Id. ¶ 189(a)-(y). Plaintiffs allege that the crisis was “foreseeable by at least the end of 2006, given the steady decline in the housing market, ... the plethora of published reports by governmental agencies, real estate and mortgage industries, [and] the media at large.” Id. ¶ 136.
Citigroup allegedly increased its activity in the subprime and securitization market in early 2005. By November 2007, its subprime exposure “amounted to a staggering $55 billion in at least one of its banking units — almost 30% of what the entire Company was worth at the time.” Id. ¶ 134. According to plaintiffs, Citigroup reported subprime-related losses of $18.1 billion for the fourth quarter of 2007, and $7.5 billion for the first quarter of 2008. Plaintiffs allege that, as a result of Citigroup’s “dire financial condition,” its share price declined by over 74% between June 2007 and July 2008 — a loss of over $200 billion in market value in a little over one year. Id. ¶ 175. The losses sustained during the Class Period of January 1, 2007 through January 15, 2008 allegedly “had an enormous impact on the value of participants’ retirement assets,” id. ¶ 238.
Such allegations support a reasonable inference that the relatively sophisticated members of the Investment Committee— by virtue of their responsibilities as fiduciaries of the Plans — would have had at least some awareness of both Citigroup’s massive subprime exposure, and the growing potential for a market-wide crisis. That is, members of the Investment Committee were charged with selecting and monitoring Plan investment options, including Citigroup stock, which was the Plans’ single largest asset.10 It is thus reasonable to infer that in discharging their investment-related duties, Investment Committee members would have informed themselves of material information concerning Citigroup’s business and operations that was relevant to the appropriateness of investing Plan assets in Citigroup stock. See In re Coca-Cola Enters. Inc., ERISA Litig., No. 06 Civ. 0953, 2007 WL 1810211, at *14 (N.D.Ga. June 20, 2007) (ruling that complaint withstood dismissal where plaintiffs alleged that defendants were “senior” employees “who knew or should have known all material public and nonpublic information concerning [the employer’s] business and operations that were relevant to the appropriateness of [the employer’s] common stock as a Plan investment” (internal quotations omitted)); In re Westar Energy, Inc., ERISA Litig., No. 03-4032, 2005 WL 2403832, at *25 (D.Kan. Sept. 29, 2005) (ruling that complaint withstood dismissal where plaintiffs alleged that “at least some of the Committee members knew or should have known [of alleged misrepresentations] based on their status as officers in the Company, *157and based on their own conduct” (emphasis added)).
The Complaint’s well-pleaded allegations also support a reasonable inference that the Administration Committee knew of Citigroup’s “dire financial condition,” Compl. ¶ 175. At least one individual, Richard Tazik, apparently served on both the Investment Committee and the Administration Committee during the relevant time period. On the above analysis, it is at least plausible that Mr. Tazik, by virtue of his service on the Investment Committee, knew about Citigroup’s sub-prime exposure. And because Mr. Tazik also allegedly served on the Administration Committee, it is plausible that at least one member of that Committee knew about it as well.
If, in light of this knowledge, reasonably prudent fiduciaries would have taken “meaningful steps to protect the Plans’ participants from the inevitable losses ... [that] would ensue as [Citigroup’s] non-disclosed material problems ... became public,” id. ¶ 228, then defendants may have acted imprudently.11 That, however, is a fact-intensive inquiry ill-suited for resolution at the pleading stage. I would thus vacate the District Court’s dismissal and remand for further proceedings.

II. Communications Claim

The majority also affirms the dismissal of plaintiffs’ Communications Claim, in which plaintiffs allege that Citigroup, Prince and the Administration Committee breached their fiduciary duty of loyalty (a) by failing to provide complete and accurate information to Plan participants regarding Citigroup’s financial condition, and (b) by conveying inaccurate, material information to Plan participants regarding the soundness of Citigroup stock.
For the reasons stated below, I conclude that the District Court should not have dismissed plaintiffs’ Communications Claim. I thus respectfully dissent.

A. Duty to Disclose

In affirming the dismissal of plaintiffs’ Communication Claim, the majority holds that ERISA fiduciaries have no duty to provide Plan participants with material information regarding the expected performance of Plan investment options. I find this conclusion to be contrary to the dictates of ERISA.
It is true that ERISA does not explicitly command fiduciaries to disclose such information, and the Supreme Court has not yet opined on whether the statute contemplates a duty to do so, see Varity Corp. v. Howe, 516 U.S. 489, 506, 116 S.Ct. 1065, 134 L.Ed.2d 130 (1996) (declining to reach the question). But in enacting ERISA, Congress did not attempt to “ ‘explicitly enumerate] all of the powers and duties of [ERISA] fiduciaries.’ ” Id. at 496,116 S.Ct. 1065 (parenthetically quoting Cent. States, Se. & Sw. Areas Pension Fund v. Cent. Transp., Inc., 472 U.S. 559, 570, 105 S.Ct. 2833, 86 L.Ed.2d 447 (1985)). Rather, Congress “ ‘invoked the common law of trusts to define the general scope of [fiduciaries’] authority and responsibility.’ ” Id. Trust law is thus the “starting point” for our “effort to interpret ERISA’s fiduciary duties,” after which we “must go on to ask whether ... the language of the statute, its structure, or its purposes require departing from common-law trust require*158ments.” Varity Corp., 516 U.S. at 497, 116 S.Ct. 1065.
Pursuant to this approach, I conclude that ERISA fiduciaries “have an affirmative duty to disclose material information that plan participants need to know to adequately protect their interests,” Brief for the Secretary of Labor as Amicus Curiae Supporting Plaintiffs-Appellants, In re Citigroup ERISA Litig., (2d Cir. Dec. 28, 2009) (No. 09-3804-cv), 2009 WL 7768350, at *24.
Such a duty is firmly rooted in the common law of trusts. See Glaziers & Glassworkers Union Local No. 252 Annuity Fund v. Newbridge Sec., Inc., 93 F.3d 1171, 1180 (3d Cir.1996). Indeed, the “duty to disclose material information is the core of a fiduciary’s responsibility, animating the common law of trusts long before the enactment of ERISA.” Eddy v. Colonial Life Ins. Co. of Am., 919 F.2d 747, 750 (D.C.Cir.1990). According to the Restatement of Trusts, the trustee “is under a duty to communicate to the beneficiary material facts affecting the interest of the beneficiary which he knows the beneficiary does not know and which the beneficiary needs to know for his protection in dealing with a third person.”12 Rest. (Second) of Trusts § 173, cmt. d. See also, e.g., Globe Woolen Co. v. Utica Gas & Elec. Co., 224 N.Y. 483, 489, 121 N.E. 378 (1918) (Cardozo, J.) (“A beneficiary, about to plunge into a ruinous course of dealing, may be betrayed by silence as well as by the spoken word.... [A trustee] cannot rid himself of the duty to warn and to denounce, if there is improvidence or oppression, either apparent on the surface, or lurking beneath the surface, but visible to his practised eye.... ”). The duty to disclose thus entails “an affirmative duty to inform when the [fiduciary] knows that silence might be harmful.” Bixler v. Cent. Pa. Teamsters Health-Welfare Fund, 12 F.3d 1292, 1300 (3d Cir.1993). It compensates for “the disparity of training and knowledge that potentially exists between a lay beneficiary and a trained fiduciary.” See id.
Nothing in ERISA warrants a dilution of the common law requirements. In order to comport with the statutory duty of loyalty, an ERISA fiduciary must “discharge his duties with respect to a plan solely in the interest of the participants and beneficiaries,” 29 U.S.C. § 1104(a)(1), and for the “exclusive purpose” of “providing benefits to participants and their beneficiaries,” id. § 1104(a)(1)(A). These provisions incorporate the fiduciary standards of the common law of trusts. See, e.g., Pegram v. Herdrich, 530 U.S. 211, 224, 120 S.Ct. 2143, 147 L.Ed.2d 164 (2000); Bixler, 12 F.3d at 1300 (citing Eddy, 919 F.2d at 750). Yet, ERISA makes the common law requirements even “more exacting.” Donovan v. Mazzola, 716 F.2d 1226, 1231 (9th Cir.1983); see also Varity Corp., 516 U.S. at 497, 116 S.Ct. 1065 (“ERISA’s standards and procedural protections partly reflect a congressional determination that the common law of trusts did not offer completely satisfactory protection.”). Indeed, ERISA’s legislative history indicates that Congress recognized the importance of disclosure, which it viewed as “a device to impart to employees sufficient information and data to enable them to know whether the plan was financially sound and being administered as intended. It was expected that the information disclosed would enable employees to police their *159plans.” S.Rep. No. 93-127, at 27 (1974), reprinted in 1974 U.S.C.C.A.N. 4838, 4863. I thus find no basis in ERISA for adopting a disclosure rule that affords beneficiaries less protection than they enjoyed at common law. See Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 113-14, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989).
In light of the stringent statutory duty of loyalty, our sister courts of appeals have recognized a duty to advise participants of circumstances that severely threaten plan assets, when fiduciaries have reason to know that their silence may be harmful. In McDonald v. Provident Indemnity Life Insurance Co., for example, the Fifth Circuit held that the duty to disclose material information under such circumstances is an “obvious component” of ERISA’s fiduciary duty provision. 60 F.3d 234, 237 (5th Cir.1995). There, a trustee of a group health insurance plan failed to inform the plan sponsor — a small business owner — of a replacement insurer’s new rate schedule, which set “prohibitive” premiums following the occurrence of a “single catastrophic claim.” Id. at 237. When the business owner’s dependent suffered a near-fatal accident, the insurer, over the course of one year, increased the company’s premiums from $2000 per month to over $15,000 per month. Id. Unable to afford continued coverage, the company was forced to let the policy lapse. Id. The McDonald court concluded that information regarding the rate schedule was material due to the “impact” the schedule would have had on any small employer. Id. The trustee thus had a duty to disclose. Id. According to a subsequent panel of the Court of Appeals for the Fifth Circuit, McDonald adopted a “case by case” approach in which the duty to disclose is triggered under “special circumstance[s],” such as when concealed information could cause an “extreme impact” to plan participants and beneficiaries. Ehlmann v. Kaiser Found Health Plan of Tex., 198 F.3d 552, 556 (5th Cir.2000).
Other courts have recognized that a disclosure duty may arise under similar circumstances.13 See, e.g., Watson v. Deaconess Waltham Hosp., 298 F.3d 102, 114-15 (1st Cir.2002) (explaining that an affirmative duty to inform beneficiaries of material facts about the plan arises where “there was some particular reason that the fiduciary should have known that his failure to convey the information would be harmful” (citing Griggs v. E.I. DuPont de Nemours & Co., 237 F.3d 371, 381-82 (4th Cir.2001); Barker v. Am. Mobil Power Corp., 64 F.3d 1397, 1403 (9th Cir.1995); Eddy, 919 F.2d at 749)). See also Pegram, 530 U.S. at 227 n. 8, 120 S.Ct. 2143 (noting, in dictum, that “it could be argued that [an HMO] is a fiduciary insofar as it has discretionary authority to administer the plan, and so it is obligated to disclose characteristics of the plan and of those who provide services to the plan, if that information affects beneficiaries’ material interests ” (emphasis added)); Kalda v. Sioux Valley Physician Partners, Inc., 481 F.3d 639, 644 (8th *160Cir.2007); Devlin v. Empire Blue Cross & Blue Shield, 274 F.3d 76, 87 (2d Cir.2001); Bixler, 12 F.3d at 1300 (ruling that an affirmative disclosure duty arises “where the trustee knows that silence might be harmful”); Glaziers & Glassworkers, 93 F.3d at 1182 (“[A] fiduciary has a legal duty to disclose to the beneficiary only those material facts, known to the fiduciary but unknown to the beneficiary, which the beneficiary must know for its own protection.... The well established obligations endemic in the law of trusts requires nothing less.”); Acosta v. Pac. Enters., 950 F.2d 611, 618-19 (9th Cir.1991) (“[A]n ERISA fiduciary has an affirmative duty to inform beneficiaries of circumstances that threaten the funding of benefits.”). '
These authorities lead me to conclude that ERISA fiduciaries must disclose material information that plan participants reasonably need to know in order to adequately protect their retirement interests. I thus agree with those district courts that have found in ERISA’s fiduciary provisions a duty to disclose material, adverse information regarding an employer’s financial condition or its stock, where such information could materially and negatively affect the expected performance of plan investment options. See, e.g., In re Polaroid ERISA Litig., 362 F.Supp.2d 461, 478-79 (S.D.N.Y.2005) (holding that plaintiffs stated a claim based on defendants’ alleged failure “to keep Plan participants informed of material adverse developments” regarding the employer’s deteriorating financial situation); In re Enron Corp. Sec., Derivative & ERISA Litig., 284 F.Supp.2d 511, 562 (S.D.Tex.2003) (holding that plaintiffs stated a claim based on defendants’ alleged failure to disclose information about Enron’s “dangerous financial condition” of which the defendants knew or should have known); In re Dynegy, Inc. ERISA Litig., 309 F.Supp.2d 861, 888 (S.D.Tex.2004) (“[W]hen the ... defendants distributed [materials] that encouraged plan participants to carefully review Dynegy’s SEC filings, they also triggered an affirmative duty to disclose material adverse information that the ... defendants knew or should have known regarding the risks and appropriateness of investing in company stock.” (citing McDonald, 60 F.3d at 237)).
The majority believes that such a duty would “improperly transform fiduciaries into investment advisors” by forcing them “to give investment advice or to opine on the stock’s condition.” Maj. Op. at 143 (quotations omitted). I disagree. Plaintiffs do not seek, and the duty to disclose would not compel, the provision of “investment advice” or “opinions” regarding corporate stock. Rather, the duty to disclose would merely ensure that, where retirement plan assets are severely threatened, employees receive complete, factual information such that they can make their own investment decisions on an informed basis. See, e.g., In re CMS Energy ERISA Litig., 312 F.Supp.2d 898, 916 (E.D.Mich.2004) (finding that plaintiffs had “not alleged that defendants had any duty to provide the participants with investment advice”; rather, plaintiffs’ allegations “concerned] the fiduciary duties surrounding disclosure found in ERISA; i.e. that [defendants] could not mislead or fail to disclose information that they knew or should have known would be needed by participants to prevent losses”).
I also take issue with the majority’s conclusion that “the Administration Committee provided adequate warning that the Stock Fund was an undiversified investment subject to volatility and that Plan participants would be well advised to diversify their retirement savings,” Maj. Op. at 143. As a preliminary matter, whether information provided to participants was adequate to inform them of the risks of *161investing in employer stock is generally a “fact-intensive inquiry that must await a full factual record.” In re Morgan Stanley ERISA Litig., 696 F.Supp.2d 345, 363 (S.D.N.Y.2009) (quotations omitted). In any event, I fail to see how generalized warnings concerning the inherent risks of undiversified investments could, as a matter of law, place lay beneficiaries on notice of the specific fiduciary misconduct alleged here. See, e.g., In re SunTrust Banks, Inc. ERISA Litig., 749 F.Supp.2d 1365, 1377 (N.D.Ga.2010) (ruling that boilerplate warning “cannot satisfy Defendants’ duty to disclose material negative information to Plan Participants, particularly when, as Plaintiffs allege, Defendants were aware of the deteriorating nature of the Company and its Stock”); Brieger v. Tellabs, Inc., 629 F.Supp.2d 848, 865 (N.D.Ill.2009) (explaining that fiduciaries do not discharge their duty by merely warning that a particular investment was the “riskiest” option; “the important question is whether [the fiduciaries] ... withheld material information that plaintiffs needed to make an informed decision about their investment selections”).
Where, as here, diversification is not “in the picture to buffer the risk to the beneficiaries should the company encounter adversity,” fiduciaries must “be especially careful to do nothing to increase the risk faced by the participants still further.” See Armstrong v. LaSalle Bank Nat’l Ass’n, 446 F.3d 728, 732 (7th Cir.2006).

B. Misrepresentations

The majority also concludes that plaintiffs failed to state a claim for breach of the statutory duty of loyalty based on certain alleged misrepresentations made by Citigroup, Prince, and the Administration Committee. Specifically, the majority holds (1) that neither Citigroup nor Prince “acted as a Plan fiduciary when making the statements at issue,” Maj. Op. at 143-44; and (2) that plaintiffs alleged insufficient facts to demonstrate that the Administration Committee knew or should have known that its statements were false, Maj. Op. at 144. I disagree with both holdings.

1. Plaintiffs Sufficiently Alleged that Citigroup and Prince Acted as ERISA Fiduciaries

“In every case charging breach of ERISA fiduciary duty,” the threshold question is whether the defendant “was acting as a fiduciary (that is, was performing a fiduciary function) when taking the action subject to complaint.” Pegram v. Herdrich, 530 U.S. 211, 226, 120 S.Ct. 2143, 147 L.Ed.2d 164 (2000); see also Bell v. Pfizer, Inc., 626 F.3d 66, 73 (2d Cir.2010) (citing Pegram). In pertinent part, section 3(21)(A) of ERISA states that a defendant “is a fiduciary with respect to a plan to the extent ... he has any discretionary authority or discretionary responsibility in the administration of such plan.” 29 U.S.C. § 1002(21)(A). This test is a functional one14 that expands “the universe of persons subject to fiduciary duties.” See Mertens v. Hewitt Assocs., 508 U.S. 248, 262, 113 S.Ct. 2063, 124 L.Ed.2d 161 (1993). As we have emphasized, Congress intended “that ERISA’s definition of fiduciary be broadly construed.” Frommert v. Conkright, 433 F.3d 254, 271 (2d Cir.2006) (citing LoPresti v. Terwilliger, 126 F.3d 34, 40 (2d Cir.1997)).
In accordance with the foregoing, the Supreme Court has held that a person may acquire status as an ERISA fiduciary by *162communicating to beneficiaries about the likely future of their plan benefits. See Varity Corp. v. Howe, 516 U.S. 489, 502, 116 S.Ct. 1065, 134 L.Ed.2d 130 (1996). The employer/plan administrator in Varity misrepresented the security of plaintiffs’ non-pension benefits to induce them to transfer to a new subsidiary, which the employer had created for the purpose of placing its “money-losing eggs in one financially rickety basket.” Id. at 493-94, 116 S.Ct. 1065. The plaintiffs lost their benefits when the subsidiary went into receivership. Id. at 494, 116 S.Ct. 1065. Their suit alleged that the employer’s deception violated ERISA-imposed fiduciary obligations. See id. at 504, 116 S.Ct. 1065.
For our purposes, the issue in Varity was whether the employer was “acting in its capacity as an ERISA ‘fiduciary’ when it significantly and deliberately misled the [plaintiffs].” Id. at 491, 116 S.Ct. 1065. The Court answered that question in the affirmative. Drawing on the common law of trusts, the Court concluded that “[conveying information about the likely future of plan benefits, thereby permitting beneficiaries to make an informed choice about continued participation,” constitutes a discretionary act of plan “administration” within the meaning of section 3(21)(A). Id. at 502-03, 116 S.Ct. 1065. The employer thus “was acting as a fiduciary (that is, was performing a fiduciary function),” Pegram, 530 U.S. at 226, 120 S.Ct. 2143, when it misled the plaintiffs. The Court did not base its holding on the mere fact that the employer made statements about the subsidiary’s expected financial condition, or on the mere fact that the employer’s business decision turned out to have an adverse impact on the plan. Varity, 516 U.S. at 505, 116 S.Ct. 1065. Rather, the determinative factor was that the employer “intentionally connected its statements about [the subsidiary’s] financial health to statements it made about the future of benefits, so that its intended communication about the security of benefits was rendered materially misleading.” Id. The Court emphasized that “making intentional representations about the future of plan benefits in that context is an act of plan administration” under section 3(21)(A). Id. (emphasis added).
In light of Varity, I conclude that plaintiffs have sufficiently alleged that Citigroup and Prince were acting as fiduciaries within the meaning of section 3(21)(A) when they made the misrepresentations here at issue. Plaintiffs allege that Citigroup and Prince were fiduciaries to the extent they exercised authority or responsibility over the “administration” of the Plans. Compl. ¶¶ 52, 61. This conclusion is supported with factual allegations which, if true, would establish that Citigroup and Prince conveyed information — albeit misleading information — about the “likely” future of Plan benefits. See Varity, 516 U.S. at 504,116 S.Ct. 1065.
Specifically, plaintiffs allege that Citigroup and Prince “regularly communicated with ... the Plans’ participants! ] about Citigroup’s performance, future financial and business prospects, and Citigroup stock, the single largest asset of [the] Plans.” Compl. ¶ 197 (emphasis added); see also id. ¶¶ 30, 48. These communications, which were directed to Plan participants in various writings and at mandatory town hall meetings, allegedly encouraged employees to invest in Citigroup stock through the Plans. According to plaintiffs, the communications fostered “an inaccurately rosy picture of the soundness of Citigroup stock as a Plan investment” by, among other things, failing to disclose “the significance and the risks posed by the Company’s sub-prime exposure.” Id. ¶¶ 199-200; see also id. ¶¶ 60 (“Prince made numerous statements, many of which were incom*163píete and inaccurate, to employees, and thus Plan participants, regarding the Company, and the future prospects of the Company specifically with regard to the risk, or purported lack thereof, faced by the Company as a result of its sub-prime exposure.”), 133, 136, 191, 237. As a result, Citigroup and Prince allegedly “prevented the Plans’ participants from appreciating the true risks presented by investing] in Citigroup stock,” and thus deprived participants of the opportunity to make informed investment decisions. Id. ¶ 199.
Accepting these allegations as true, and drawing all reasonable inferences in the plaintiffs’ favor, I would hold that plaintiffs sufficiently alleged that Citigroup and Prince acted as fiduciaries within the meaning of section 3(21)(A) of ERISA. This is because plaintiffs’ allegations, if true, would demonstrate that Citigroup and Prince “intentionally connected” their statements about the financial health of Citigroup and the performance of its stock to the likely future of Plan benefits, such that their “intended communication about the security of benefits was materially misleading,” Vanity, 516 U.S. at 505, 116 S.Ct. 1065. That is, plaintiffs sufficiently allege that Citigroup and Prince acted as fiduciaries because, under the circumstances, the making of intentional representations about the future of plan benefits “is an act of plan administration” within the meaning of ERISA. See id.
In holding that neither Citigroup nor Prince acted as a Plan fiduciary, the majority finds inapplicable the rule articulated in Vanity. The majority observes that the employer in Vanity — unlike Citigroup and Prince — also served as the designated plan administrator. According to the majority, then, Vanity stands for the proposition that an employer may qualify as a fiduciary under the circumstances alleged here only if it is also the designated plan administrator.
I do not understand Vanity or ERISA to impose such a formalistic limitation. As the Supreme Court has emphasized, ERISA provides that a person is a “fiduciary” not only if he is so named by a benefit plan, but also if he exercises discretionary authority over the plan’s administration. See Mentens, 508 U.S. at 251, 113 S.Ct. 2063 (citing 29 U.S.C. §§ 1102(a), 1002(21)(A)). In other words, ERISA “defines ‘fiduciary’ not in terms of formal trusteeship, but in functional terms of ... authority over the plan.” Id. at 262, 113 S.Ct. 2063. As a result, persons other than designated plan administrators may, by performing an administrator-type function, acquire fiduciary status. The majority may be correct that Citigroup and Prince were not the official Plan administrators, and thus “were not [officially] responsible for communicating with Plan participants,” Maj. Op. at 144 (emphasis added). But actors cannot take refuge from fiduciary status in official titles or responsibilities where their “ultra vires” conduct is fiduciary in nature. A rule to the contrary would create perverse incentives anathema to ERISA.
As I see it, the point in Vanity is not that the designation of “plan administrator” is a prerequisite to fiduciary status. Instead, I view Vanity as standing for the proposition that a person may act as a fiduciary — regardless of his official title— when he makes intentional representations about the future of plan benefits, because such conduct amounts to an act of plan “administration” within the meaning of section 3(21)(A). See Vanity, 516 U.S. at 502-05, 116 S.Ct. 1065. In short, the alleged misrepresentations at issue in Vanity were actionable because they constituted fiduciary acts under ERISA’s functional definition of “fiduciary”; whether the em*164ployer was also the designated plan administrator simply was not dispositive.
I am not alone in this view. See, e.g., Marks v. Newcourt Credit Group, Inc., 342 F.3d 444, 454 n. 2 (6th Cir.2003) (citing Varity, and noting that “we have only recognized [fiduciary duty] claims when a plan administrator, or an employer exercising discretionary authority in connection with the plan’s management or administration misrepresents a material fact” (internal quotations omitted) (emphasis added)); Luckasevic v. World Kitchen, Inc., No. 06 Civ. 1629, 2007 WL 2683995, at *4 (W.D.Pa. Sept. 7, 2007) (rejecting defendants’ claim that Varity is inapposite based on the “plan administrator” distinction, and noting that “the employer need not be the administrator to be deemed a fiduciary”); Adamczyk v. Lever Bros. Co., Div. of Conopeo, 991 F.Supp. 931, 937-938, 938 (N.D.Ill.1997) (“To the extent to which [communications] are related to plan administration, [they] trigger fiduciary duties on the part of the communicator, regardless of his or her identity. Even where an independent plan administrator has been appointed, it is entirely possible that it will be the employer that engages in such communications with the employees. Neither the statute nor the Supreme Court’s holding in Varity precludes the possibility that the employer acts as a fiduciary in such a case.” (emphasis added)).

2. Plaintiffs Sufficiently Alleged That The Administration Committee Knowingly Made False Statements

The majority also concludes that plaintiffs failed to adequately allege that the Administration Committee made statements it knew to be false. According to the majority, the Complaint contains only one, conclusory allegation on this front: that the Administration Committee members “ ‘knew or should have known about Citigroup’s massive subprime exposure as a result of their responsibilities as fiduciaries of the Plans,’ ” Maj. Op. at 144-45 (quoting Compl. ¶ 188). The majority holds that this “ ‘naked assertion’ ” does not satisfy the plausibility standard mandated by Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007), Maj. Op. at 144 (quoting Twombly, 550 U.S. at 557, 127 S.Ct. 1955).
I disagree. I find in the Complaint numerous and specific factual allegations which, if true, would support a reasonable inference that the Administration Committee knowingly made false statements to Plan participants.
Plaintiffs allege that the Administration Committee “regularly” provided “materially false and misleading” information to Plan participants about Citigroup’s performance, future financial and business prospects, and its stock. Compl. ¶ 197. The Administration Committee allegedly conveyed such false information through newsletters, memos, Plan documents, and other related materials, as well as through the Plans’ Summary Plan Descriptions, which incorporated by reference Citigroup’s misleading filings with the Securities and Exchange Commission. Id. ¶¶ 67, 143 (“Citigroup did not disclose any sub-prime-related problems or the amount of its subprime-related loan loss exposure in its 2006 Form 10-K.”), 197. According to plaintiffs, these communications “fostered an inaccurately rosy picture of the soundness of Citigroup stock as a Plan investment,” id. ¶ 199, because they failed to disclose the magnitude of Citigroup’s “involvement in subprime lending and other improper business practices,” id. ¶ 237.
As I discussed in the context of the Prudence Claim, plaintiffs’ factual allegations support a reasonable inference that the members of the Investment Committee, by virtue of their fiduciary responsibil*165ities, would have had at least some awareness of both Citigroup’s massive subprime exposure, and the growing potential for a market-wide crisis. I also noted that, because one individual — Mr. Tazik — allegedly served on both the Investment and Administration Committees, it was plausible that at least one member of the Administration Committee was also aware of Citigroup’s precarious financial position.
In the context of the instant claim, plaintiffs’ allegations support a similar inference. Because, on the above analysis, it is plausible that at least some members of the Investment Committee knew of Citigroup’s subprime exposure, we may reasonably infer that they would have known the falsity of SEC filings which misrepresented the extent of that exposure. And because Mr. Tazik allegedly served on both the Investment and the Administration Committees, it is reasonable to infer that he would thus have known of the falsity of the Summary Plan Descriptions, which incorporated Citigroup’s misleading SEC filings. See, e.g., In re Dynegy, Inc. ERISA Litig., 309 F.Supp.2d 861, 880-82 (S.D.Tex.2004) (ruling that complaint withstood dismissal where defendants allegedly “knew or should have known by virtue of their positions in the [c]ompany and access to contradictory information ... that the [Summary Plan Documents] contained affirmative, material misrepresentations” (internal quotations omitted)).
In light of the foregoing, I would hold that plaintiffs plausibly alleged that the misstatements here at issue were knowingly made by at least one member of the Administration Committee. Of course, the extent of that member’s knowledge, or any other member’s knowledge, is an evidentiary matter that cannot be resolved here. Accordingly, I would vacate the District Court’s decision and remand for further proceedings.

C. Summary

For the reasons stated above, I would vacate the District Court’s dismissal with respect to both components of the Communication Claim, and remand for further proceedings.

III. Remaining Claims

The majority affirms the dismissal of Counts III (failure to monitor), IV (failure to disclose information to co-fiduciaries), and VI (co-fiduciary liability) for the same reasons it affirmed the dismissal of Counts I and II. Because I conclude that dismissal of Counts I and II was improper, I would also vacate the dismissal of Counts II, IV and VI, and remand for further proceedings.
Finally, the majority affirms the dismissal of Count V, in which plaintiffs allege that all defendants breached their duty to avoid conflicts of interest by receiving stock-based compensation. I agree that this claim was properly dismissed. I thus join the majority for this part of the opinion only.
* * *

Conclusion

In sum, I would not adopt the Moench presumption of prudence, but would instead evaluate the prudence of ESOP fiduciaries’ investment decisions under plenary review. Pursuant to such a review, I would hold that plaintiffs’ Prudence Claim withstands scrutiny under Rule 12(b)(6) of the Federal Rules of Civil Procedure. I would also hold that the District Court erred in dismissing plaintiffs’ Communication Claim. Accordingly, I would vacate the District Court’s dismissal of the foregoing claims, as well as its dismissal of the secondary claims (Counts II, IV, and VI), and would remand for further proceedings.
*166Because I conclude that the majority properly affirmed the dismissal of Count V of plaintiffs’ Complaint, I join that part of the majority’s opinion.

. To oversimplify, the subprime crisis may be summarized as follows. Beginning in approximately 2001, many mortgage lenders approved loans for borrowers who did not qualify for prime interest rates; many of these loans were "hybrid adjustable rate mortgages,” which provided a fixed rate of interest for an introductory period, after which the rate would "balloon.” Financial institutions packaged these mortgages into mortgage-backed securities, which were then sold to investors. By 2006, home prices began to drop while interest rates rose. As a result, many borrowers could neither pay their existing mortgages nor refinance at favorable rates. Delinquencies and foreclosures thus increased, and the value of mortgage-backed securities dropped precipitously. Banks and other investors that were overly exposed to such investments faced the threat of collapse. See generally Compl. ¶¶ 108-34, 189; Majority Staff of the Joint Economic Comm, of the U.S. Cong., The Subprime Lending Crisis (2007), available at http://jec.senate.gov/archive/Documents/ Reports/10.25.070ctoberSubprimeReport.pdf. See also Litwin v. Blackstone Group, L.P., 634 F.3d 706, 710 (2d Cir.2011).

. Andrew Ross Sorkin, Too Big To Fail 5 (2010).

. The majority here states that "only circumstances placing the employer in a ‘dire situation' that was objectively unforeseeable by the settlor could require fiduciaries to override plan terms.” Maj. Op. at 140 (quoting Edgar, 503 F.3d at 348).

. Quan v. Computer Scis. Corp., 623 F.3d 870, 883 (9th Cir.2010).

. Kirschbaum v. Reliant Energy, Inc., 526 F.3d 243, 256 (5th Cir.2008).

. The Court decided the Gearren matter in a separate, per curiam opinion filed today. See Gearren v. McGraw-Hill Cos., 660 F.3d 605 (2d Cir.2011) (per curiam).

. See, e.g., Howard v. Shay, 100 F.3d 1484, 1488-89 (9th Cir.1996) (undertaking plenary review of ESOP fiduciary’s conduct); Eyler v. Comm’r of Internal Revenue, 88 F.3d 445, 454-56 (7th Cir.1996) (same); Donovan v. Cunningham, 716 F.2d 1455, 1473-74 (5th Cir.1983) (same); Burud v. Acme Elec. Co., Inc., 591 F.Supp. 238, 248 (D.Alaska 1984) ("There are no statutory or federal common law presumptions cloaking the; fiduciary’s act in prudence. To the contrary, ERISA invites the closest scrutiny of a trustee’s action.”).

. See, e.g., ESOP Statistics, ESOP Association, http://www.esopassociation.org/media/media_ statistics.asp (last visited Aug. 11, 2011) (noting that the "rapid increase in new ESOPs in the late 1980s subsided after Congress removed certain tax incentives in 1989”); see also Michael E. Murphy, The ESOP at Thirty: A Democratic Perspective, 41 Willamette L.Rev. 655, 661 n. 42 (2005).

. As the ESOP Association notes, "[t]he amounts which may be contributed to an ESOP on a tax-deductible basis are higher than the amounts which may be contributed to other kinds of defined contribution plans.” Brief for the ESOP Association as Amicus Curiae Supporting Defendants-Appellees, at 8-9 n. 5 (citing I.R.C. § 404(a)(9)). In addition, corporations that use ESOPs to obtain loans may take tax deductions with respect to both the interest and the principal payments on the loan. Id. (citing I.R.C. § 404(a)(3), (9)). Employers may also deduct certain dividends paid on ESOP stock. See I.R.C. § 404(k).

. As of December 31, 2007 — the day before the commencement of the Class Period — the Citigroup Plan held Citigroup common stock with a fair market value of approximately $2.14 billion; this represented approximately 19% of the total invested assets of the Citigroup Plan for Plan year 2007. As of the same date, the Citibuilder Plan held Citigroup common stock with a fair market value of approximately $4.3 million; this represented approximately 32% of the total invested assets of the Citibuilder Plan for Plan year 2007.

. See 29 C.F.R. § 2550.404a-l(b)(l) (noting that the duty of prudence is satisfied if the fiduciary (i) “[h]as given appropriate consideration to those facts and circumstances that, given the scope of such fiduciary's investment duties, the fiduciary knows or should know are relevant to the particular investment ... and (ii) [h]as acted accordingly.'').

. And if a fiduciary is required to arm beneficiaries with sufficient information to deal with a “third person,” the fiduciary is plainly required to provide sufficient information to allow the beneficiary to deal with the fiduciary himself. See Glaziers & Glassworkers, 93 F.3d at 1181 n. 6.

. According to the majority, certain of these authorities are inapposite because they “relate to administrative, not investment, matters such as participants’ eligibility for defined benefits or the calculation of such benefits.” Maj. Op. at 142-43.
I am not persuaded. The "benefit” in a defined contribution plan is "just whatever is in the retirement account when the employee retires.” Harzewski v. Guidant Corp., 489 F.3d 799, 804-05 (7th Cir.2007). The precise “benefit” at issue here may differ from those at issue in the above-mentioned authorities, but it is a "benefit” nonetheless. That is why a breach of fiduciary duty that diminishes the value of the retirement account "gives rise to a claim for benefits measured by the difference between what the retirement account was worth when the employee retired and cashed it out and what it would have been worth then had it not been for the breach of fiduciary duty.” Id. at 807 (emphasis added).

. See 29 C.F.R. § 2509.75-8 (FR-16) (“The personal liability of a fiduciary who is not a named fiduciary is generally limited to the fiduciary functions, which he or she performs with respect to the plan.”).