US Supreme Court hears arguments in Intel plan case — CNBC
The US Supreme Court on October 6 heard oral arguments in Anderson v. Intel Corp. Investment Policy Committee, a case concerning investments in Intel’s 401(k) retirement plan. As CNBC reports, the lawsuit, filed by a former Intel employee in 2019, raises the question of whether employees complaining about low investment returns must provide the court with a meaningful benchmark for comparison.
Dispute over the comparison criterion
Employees argue that the relatively low returns on investments in Intel’s plans indicate a breach of fiduciary duties. Lower courts did not support this position, stating that claims of insufficient returns are not enough without an appropriate benchmark for evaluating performance.
During the hearing, the justices repeatedly used the comparison of apples and oranges while discussing different investment funds. Justice Clarence Thomas noted that a fund aimed at higher but riskier returns cannot be compared with a fund designed to protect against losses. Justices Elena Kagan, Samuel Alito, Amy Coney Barrett and Neil Gorsuch also raised questions about the need for a comparable evaluation criterion.
Assistant Solicitor General Amy Brown said the court could outline certain parameters for the concept of a meaningful benchmark. According to her, prudence in such matters concerns the process of making investment decisions rather than their performance.
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Employers await decision and new rules
Lawyers following the hearing believe the justices’ questions may indicate an inclination to support Intel and leave in place the ruling of the Ninth Circuit Court of Appeals. The Supreme Court has not yet made a final decision.
Employers are also awaiting final US Department of Labor rules on alternative assets in retirement plans. The ERISA law does not prohibit including alternative investments in 401(k) plans, including private equity and hedge funds. At the same time, large companies generally do not offer such instruments; the source notes that they face higher litigation risks.
In March, the US Department of Labor proposed a rule intended to ease legal and regulatory barriers to adding alternative investments to retirement plans. Industry representatives expect that even if the court rules in Intel’s favor, large employers will introduce private funds more slowly than small and medium-sized companies.
