KRAUTER & COMPANY

P r o d uc t s
FIDUCIARY LIABILITY

UNDERSTANDING FIDUCIARY LIABILITY

Fiduciary Liability Insurance pays, on behalf of the insured, legal liability arising from
claims for alleged failure to prudently act within the meaning of the Pension Reform Act
of 1974. “Insured” is variously defined as a trust or employee benefit plan, any trustee,
officer or employee of the trust or employee benefit plan, employer who is sole sponsor
of a plan and any other individual or organization designated as a fiduciary.

If you are a director or officer who makes decisions about your company's 401(k) plan or
other qualified employee benefit plan(s), you are personally liable -- personal assets are
at risk! Under the ERISA act of 1974 (Employee Retirement Income Security Act),
fiduciaries can be held personally liable for losses to a benefit plan incurred as a result of
their alleged errors, omissions, or breach of their fiduciary duties. Many fiduciaries
believe incorrectly that their ERISA fidelity bond protects their personal assets.

Furthermore, many think that this type of coverage is included in their D&O policy. Most
D&O policies exclude fiduciary liability exposures as well as those exposures pertaining
to the Employee Retirement Income Security Act (ERISA). Designated fiduciaries are not
the only targets of such lawsuits; targets can also include the employer and even the
plan itself. Claims can be brought by plan participants, participants’ legal estates, the
Department of Labor, and the Pension Benefit Guaranty Corporation. Such claims may
include allegations of:

Improper advice or disclosure

Inappropriate selection of advisors or service providers
Imprudent investments
Lack of investment diversity
Breach of responsibilities or fiduciary duties imposed by ERISA
Negligence in the administration of a plan
Conflict of interest with regard to investments

WHY KRAUTER FIDUCIARY?

Krauter & Company can help a firm mitigate the personal liability of its fiduciaries by
consulting on the appropriate risk management strategy and insurance solution.

MORE INFORMATION? CONTACT US.

For more information about Krauter & Company’s Fiduciary capabilities and
professionals, send your request to: info@krautergroup.com.