In light of the significant investment losses incurred by customers of Bernard L. Madoff Investment Securities, LLC, the U.S. Department of Labor (the DOL) has issued guidance to retirement plan fiduciaries. If a plan has been exposed to investment losses as a result of plan assets being invested with Madoff entities, the plan's fiduciaries should take steps to protect the plan assets and provide adequate disclosure to plan participants.The guidance released by the DOL instructs plan fiduciaries to:

1. request disclosures from investment managers, fund managers and other investment intermediaries regarding the plan's potential exposure to Madoff-related losses;

2. seek advice regarding the likelihood of losses due to investments with Madoff-risk;

3. make appropriate disclosures to other plan fiduciaries, participants, and beneficiaries; and

4. consider whether the plan has any claims that should be asserted.

Additionally, if a defined benefit pension plan is no longer able to pay benefits when due as a result of the Madoff liquidation, the plan sponsor or plan administrator may need to file a notice with the Pension Benefit Guaranty Corporation.

Attorneys in Ballard Spahr's Employee Benefits and Executive Compensation Group can help you maneuver through the current economic situation and its impact on your fiduciary obligations to your retirement plans and plan participants. If you have questions regarding the steps you should take with respect to the Madoff liquidation, or if you have general questions regarding how best to meet your fiduciary obligations with respect to your retirement plans, please contact Brian M. Pinheiro at 215.864.8511 or pinheiro@ballardspahr.com.


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