Accountant is not a fiduciary under ERISA.Afederal court in Rhode Island Rhode Island, island, United States Rhode Island, island, 15 mi (24 km) long and 5 mi (8 km) wide, S R.I., at the entrance to Narragansett Bay. It is the largest island in the state, with steep cliffs and excellent beaches. held that an accountant who recommended an investment to an employee benefit plan was not a "fiduciary" under the Employee Retirement Income Security Act The Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C.A. § 1001 et seq. (1974), is a federal law that sets minimum standards for most voluntarily established Pension and health plans in private industry to provide protection for individuals enrolled in these plans. . The accountant had recommended an investment in a mortgage company to the employee benefit plan. The plan trustees authorized au·thor·ize tr.v. au·thor·ized, au·thor·iz·ing, au·thor·iz·es 1. To grant authority or power to. 2. To give permission for; sanction: the transfer of $130,000 to a partnership, North Main Street Associates, which then transferred the investment to the mortgage company. The accountant who had recommended the investment was also a partner in North Main Street Associates. An additional responsibility of the accountant to the plan was to assure assignments of mortgages from the mortgage company to North Main Street. These mortgages were to serve as collateral for the investment. The accountant did not receive these assignments. The plan subsequently lost its entire investment. When the investment failed, had the collateral existed, the plan could have used that collateral to lessen the investment loss. The trustees alleged the accountant had breached a fiduciary duty Noun 1. fiduciary duty - the legal duty of a fiduciary to act in the best interests of the beneficiary legal duty - acts which the law requires be done or forborne under ERISA See Employee Retirement Income Security Act. ERISA See Employee Retirement Income Security Act (ERISA). in recommending the investment and failing to procure To cause something to happen; to find and obtain something or someone. Procure refers to commencing a proceeding; bringing about a result; persuading, inducing, or causing a person to do a particular act; obtaining possession or control over an item; or making a person proper security. The court ruled for the accountant, noting that an individual is a fiduciary under ERISA only if he or she performs one of the following tasks: 1. Exercises any discretionary authority over a plan or its assets. 2. Renders investment advice for a fee. 3. Has any discretionary authority in plan administration. The court ruled that suggesting an investment or having responsibility to ensure the receipt and recording of mortgage assignments did not involve discretionary authority. (Cottrill v. Sparrow, Johnson & Ursillo, Inc., No. C.A. 94-0118T, Dist. Ct. R.I., 1995) Note: The March 1995 Legal Scene discussed the U.S. Supreme Court case involving Silvia S. Ibanez v. the Florida Department Florida is a department (departamento) of Uruguay. Population and Demographics As of the census of 2004, there were 68,181 people and 21,938 households in the department. The average household size was 3.1. For every 100 females, there were 100.4 males. of Business and Professional Regulation, Board of Accountancy. That article noted that Ibanez was charged by the board with practicing public accounting in an unlicensed firm. Although the original administrative complaint filed by Florida contained this allegation, the allegation was subsequently withdrawn by Florida in its amended administrative complaint. |
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