Evaluate and approve plan participation in settlements

Independent Fiduciary Roles


When an employee benefit plan participates in a litigation settlement, there is often a potential conflict of interest between the plan and the settling defendants. The United States Department of Labor (DOL) has determined that a plan's release of its potential claims against the defendant company and/or plan fiduciaries in settling such litigation may be a prohibited transaction under ERISA. To address this potential prohibited transaction, the DOL requires that plans subject to ERISA retain an independent fiduciary to evaluate the settlement and ultimately approve the plan's participation in the settlement.

In its role as an independent fiduciary in connection with litigation settlements, Evercore Trust decides whether to approve a plan's participation in the litigation settlement based on an assessment of the fairness of the terms of the settlement. As part of this determination, we evaluate the terms of the settlement and the costs and risks of further litigation. Depending on the nature of our engagement, we also may oversee the plan trustee's submission of the plan's proof of claim.

Since the issuance of the DOL's prohibited transaction exemption for litigation settlements in 2003, Evercore Trust has served as independent fiduciary with respect to more than 85 settlements, with a total value of approximately $11.2 billion.