Marshall & Ilsley Corp. (M&I) sponsored a 401(k) plan. Among one of more than 20 different investment funds was the M&I stock fund (M&I Fund), which was also an employee stock ownership plan (ESOP). Matching contributions in the plan were automatically invested in the M&I Fund, and participants were not permitted to invest more than 30 percent of their plan assets in the M&I Fund. The plan document required that the M&I Fund be offered and provided that M&I, as “…the settlor of the Plan and Trust, intends and declares that neither the Committee nor any other Plan fiduciary shall have any authority or ability to cause the M&I Fund to be invested in anything but M&I stock...”

Between 2008 and 2009, the value of M&I stock dropped by over 50 percent. Certain participants filed a class action alleging a breach of the fiduciary duty of prudence by maintaining the M&I Fund as an investment option. The district court granted a motion to dismiss on the basis that the plaintiffs failed to state a claim for relief because they did not overcome the presumption of prudence applicable in the matter. The plaintiffs appealed to the Seventh Circuit Court, which upheld the dismissal of the action. The Seventh Circuit Court found that the circumstances involved did not overcome the presumption of prudence given when plan documents require that an employer stock fund be included as an investment option, commonly referred to as the Moench presumption. The court did not find that the requirement to provide for the M&I Fund required under plan documents rose to the level of being inconsistent with ERISA. While this case is consistent with others we have recently reported in upholding the Moench presumption of prudence, the documents in this case have very strong language to support the presumption and to require the plan fiduciaries to maintain the stock fund. Other employers offering stock funds may wish to consider whether language found in their plan documents contain as strong a direction as in this case. (White v. Marshall & Ilsley Corp., 7th Cir., 2013)