The Moench Presumption in the Second Circuit

The Second Circuit Court of Appeals (New York, Connecticut, and Vermont), along with the Third, Fifth, Sixth, Ninth and Eleventh Circuits, has adopted the Moench presumption, which holds that a plan fiduciary's choice to continue offering company stock as an option for plan participants is presumed to be prudent when the plan requires the fiduciaries to do so. In Taveras v UBS AG, a judge in the District Court for the Southern District of New York relied on the Moench presumption to dismiss two complaints, one against a plan in which employer stock was mandated, and one in which it was not. The Second Circuit ruled that "the District Court erred in applying the presumption of prudence as to one of the two plans..., as that plan did not require or strongly encourage investment in UBS stock or the UBS Stock Fund. We hold that the District Court did not err, however, in applying the presumption of prudence as to the other plan at issue."