Fiduciary Duty

Abstract

The article discusses the lawsuit Maniace v. Commerce Bank of Kansas City, NA., 40 F.3d 264(8th Cir. 1994), 18 EBC 2585. Herein the article adds that bank serving as a directed trustee of an employee stock ownership plan did not violate fiduciary duty in allowing plan to continue to hold company stock even though stock price declined. In 1979, the Juvenile Shoe Company (JSC) changed its existing profit-sharing plan into an employee stock ownership plan (ESOP). JSC created two separate documents, the employee stock ownership plan (the plan) and the employee stock ownership plan trust (the trust). The plan granted administrative powers to an administrative committee (the committee) to manage the ESOP. The plan also designated the committee as "named fiduciary" and "plan administrator" for ERISA purposes. The plan's policy revolved around investment in JSC stock, with the stock being the plan's primary asset. The trust designated Commerce Bank of Kansas City (Commerce) as trustee of the ESOP. While the trust granted general responsibilities, powers and authority to the trustee, it limited the trustee's authority to manage the JSC stock. The duties and authority relating to the JSC stock remained with the committee.