Fourth Circuit Rejects ?Ç£Could Have?Ç¥ Standard for Determining Fiduciary Breach

The U.S. Court of Appeals for the Fourth Circuit held that the plan administrator failed to follow a prudent process when it decided to forcibly divest all stock of a predecessor employer while such stock was priced at an all-time low.?á As a result, the burden shifted to the administrator to prove that despite its imprudent decision-making process, its ultimate investment decision was ?Ç£objectively prudent.?Ç¥?á The lower court ruled the decision was objectively prudent because a hypothetical prudent fiduciary ?Ç£could have?Ç¥ made the same decision after performing a proper investigation.?á Rejecting this standard for determining loss causation, the Fourth Circuit held that the proper standard is whether a reasonable fiduciary ?Ç£would have?Ç¥ made the same decision.?á Tatum v. RJR Pension Investment Committee, No. 13-1360 (4th Cir. Aug. 4, 2014).