New Ruling Could Change Definition of Fiduciaries

A new Supreme Court ruling (Varity v. Howard, 3/19/96) could have a significant effect on all employee benefit plans. The case, which did not involve an ESOP, involved plans by the Varity Corporation to spin off some of its businesses. The company told employees about future benefits under the spin-off to encourage employees to be transferred. Some of the information was substantially wrong; the spin-off subsequently folded.

Employees sued, and the court ruled the company was acting as a fiduciary in providing the information, even though the communications were not part of official plan documents. Courts have been split in the past on whether promises by a company relative to a benefit plan are fiduciary issues. Moreover, the court allowed individual employees to sue; in the past, plan participants had to seek plan-wide redress. Consultants are split on whether these conclusions break new grounds, but some view it as one of the most significant cases in recent years.
Volunteer Executives Needed for Hungarian ESOP Firms

The International Executive Service Corps is looking for volunteer executives to consult with employee ownership companies in Hungary. Interested individuals should contact James Leet at the Corps at POB 10005, Stamford, CT 06904, or Pete Lucas, former president of employee-owned Flight Structures, at 205-455-5506.