The Continuing Battle Over Economically Targeted Investments: An Analysis of DOL Interpretive Bulletin 2015-01

Cardozo Law Review De Novo (2016)

Cardozo Legal Studies Research Paper No. 486

18 Pages Posted: 9 May 2016

See all articles by Edward A. Zelinsky

Edward A. Zelinsky

Yeshiva University - Benjamin N. Cardozo School of Law

Date Written: May 9, 2016

Abstract

In Interpretive Bulletin 2015-01 (IB 2015-01), the U.S. Department of Labor (DOL) renewed the now two-decades old battle over “economically targeted investments” (ETIs). As a matter of statutory interpretation, IB 2015-01, like its predecessors, is unpersuasive. The Employee Retirement Income Security Act of 1974 (ERISA) requires plan trustees to invest “solely” to provide participants’ retirement benefits. A trustee who invests in ETIs violates this statutory obligation by pursuing collateral economic benefits for persons other than plan participants. As a matter of policy, the social investing which ETIs exemplify is unsound. At best, such social investing in practice merely shuffles investment ownership without altering market-based allocations of capital.

Keywords: economically targeted investments, collateral economic benefits, Department of Labor, Interpretative Bulletin (IB) 2015-01, IB 08-1, IB 94-1, pensions, ERISA, fiduciary duties, prudence, loyalty, diversification, exclusive benefit, social investing

JEL Classification: K00, K31, K34

Suggested Citation

Zelinsky, Edward A., The Continuing Battle Over Economically Targeted Investments: An Analysis of DOL Interpretive Bulletin 2015-01 (May 9, 2016). Cardozo Law Review De Novo (2016); Cardozo Legal Studies Research Paper No. 486. Available at SSRN: https://ssrn.com/abstract=2777638

Edward A. Zelinsky (Contact Author)

Yeshiva University - Benjamin N. Cardozo School of Law ( email )

55 Fifth Ave.
New York, NY 10003
United States
212-790-0277 (Phone)

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