Sam Choy Quoted in Plan Sponsor Magazine

In the July issue of Plan Sponsor Magazine, Sam Choy is quoted in the Rules and Regulators column about sponsor involvement in the recently simplified U.S. Department of Labor's Voluntary Fiduciary Correction Program (VFCP).

There are several reasons cited for sponsor participation being very limited prior to the latest round of adjustments. “Sponsors can use it only to correct specific transactions included in the VFCP, not all wrongdoing by fiduciaries. ‘If you are not dealing with one of those specific, identified transactions, you are not eligible,’ says Sam Choy, an Atlanta-based partner at law firm Seyfarth Shaw LLP. For instance, until recently, errors made with participant loans could not be corrected in the program… Some sponsors worry that VFCP involvement—basically an acknowledgement of some form of procedural violation by the plan—could open them up to lawsuits. Plans that get into the program need to give notice to ‘interested parties,’ which includes participants, Choy says. ‘That may be an incentive to file a lawsuit,’ he says. Key changes include defining the scope of ‘under investigation.’ To be eligible for the program, a plan or its fiduciaries cannot be ‘under investigation.’ However, that term had not been defined clearly, and some believed it covered broader corporate investigations. ‘The definition was so broad that people were reluctant to take advantage of the program,’ Choy says. ‘The DoL narrowed the definition greatly, to an investigation of the plan or plan officials.’”

Concern remains that stepping forward could prompt a government investigation. “The ‘no action’ letter is very limited,” Choy says. “The government still can do a criminal investigation, and it still can go after individuals. The program is a DoL program, and it is only binding on them.”