A new OnPoint from Dechert’s Employee Benefits and Executive Compensation team discusses a recent ruling from a federal court in the Southern District of New York. There, a pension plan that had acquired notes issued by a vehicle invested in a pool of sub-prime residential mortgage-backed securities is arguing that the vehicle’s assets are “plan assets” that are subject to ERISA. Essentially, the plan’s argument is that the notes should be considered equity for ERISA purposes under ERISA’s so-called 25% test, notwithstanding that the notes were the subject of a “will” level legal opinion that the notes are debt for tax purposes. The plan further asserts, among other things, that the vehicle’s servicers are therefore ERISA fiduciaries with potential ERISA liability. On March 15, the court, although expressing skepticism regarding the plan’s claim, allowed the litigation to proceed to the discovery stage. We will be keeping an eye on this case, and please come back to Crunched Credit if and as the case develops. For more information on this topic or other ERISA matters, contact Andrew L. Oringer or Steven W. Rabitz.