The Continuing Battle Over Economically Targeted Investments: An Analysis of DOL Interpretive Bulletin 2015-01
Cardozo Law Review De Novo (2016)
18 Pages Posted: 9 May 2016
Date Written: May 9, 2016
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: Suggested Citation