UNIT EL) S 1 A 1 ES DIS 1 RIC 1 COUR! SOUTHERN DISTRICT OF NEW YORK

Transcription

1 UNIT EL) S 1 A 1 ES DIS 1 RIC 1 COUR! SOUTHERN DISTRICT OF NEW YORK IN RE J.P. JEANNERET ASSOCIATES, INC., et al. ECF Case Master File No. 09 Civ (CM) PLAINTIFFS' FIRST AMENDED COMPLAINT FOR VIOLATIONS OF THE EMPLOYEE This Document Relates To: RETIREMENT INCOME 09 Civ (CM) SECURITY ACT (ERISA) ERNEST A. HARTMAN and KIMBERLY A. BAUTISTA as Trustees of the IBEW LOCAL 139 PENSION FUND; JAMES F. COLLINS and KIMBERLY A. BAUTISTA as Trustees of the IBEW LOCAL 325 PENSION FUND; JAMES F. COLLINS and KIMBERLY A. BAUTISTA as Trustees of the IBEW LOCAL 325 ANNUITY FUND; JAMES F. COLLINS and KIMBERLY A. BAUTISTA as Trustees of the IBEW LOCAL 325 JOINT TRUST FUND; MICHAEL TALARSKI and KIMBERLY A. BAUTISTA as Trustees of the IBEW LOCAL 241 PENSION FUND; ELIZABETH F. CASSADA and JAMES A. WILLIAMS as Trustees of the IBEW LOCAL 910 ANNUITY FUND; ELIZABETH F. CASSADA and JAMES A. WILLIAMS as Trustees the IBEW LOCAL 910 PENSION FUND; THOMAS R. LOSTRACCO as Trustee of the SEIU 1199 nt;'- UPSTATE PENSION FUND; GEORGE KENNEDY t," as Trustee of the SERVICE EMPLOYEES PENSION, ;J n" FUND OF UPSTATE NEW YORK; RODNEY MALARCHIK and IRVING WOOD as Trustees of the CP+. UPSTATE NEW YORK BAKERY DRIVERS AND INDUSTRY PENSION FUND; JAMES ROUNDS and LYLE D. FASSETT as Trustees of the PLUMBERS AND PIPEFITTERS LOCAL 112 PENSION FUND; ROCKNE BURNS as Trustee of the ENGINEERS JOINT WELFARE FUND; CARMEN A. SERRETT and EARL R. HALL as Trustees of the LABORERS' LOCAL 103 ANNUITY FUND; CARMEN A. SERRETT as Trustee of the LABORERS' LOCAL 103 PENSION FUND; PATRICK MORIN and DALE STUHLMILLER as Trustees of the EMPIRE STATE CARPENTERS PENSION FUND; PATRICK MORIN and DALE STUHLMILLER as Trustees of the EMPIRE STATE CARPENTERS ANNUITY FUND; and PATRICK MORIN and DALE STUHLMILLER as Trustees of the EMPIRE STATE CARPENTERS WELFARE FUND,

2 Plaintiffs, v. IVY ASSET MANAGEMENT L.L.C.; BANK OF NEW YORK MELLON CORPORATION; J.P. JEANNERET ASSOCIATES, INC.; INCOME-PLUS INVESTMENT FUND; JOHN P. JEANNERET; PAUL PERRY; LAWRENCE SIMON; HOWARD WOHL; ADAM GEIGER; JEFFREY LINDENBAUM; JOHN ROGERS; SEAN SIMON; KEVIN BANNON; STEVEN PISARKIEWICZ; ROBERT MESCHI; SUSAN RABINOWITZ; MICHAEL SINGER; ALAN CHUANG; GREGORY VAN INWEGEN; SEAN CUMISKEY; STUART DAVIES; PETER ROSE; JOSEPH BURNS; MARK SANTERO; PETER NORIS; FARZINE HACHEMIAN; COLLEEN BALDWIN; GLENN CUMMINS; IVY MANAGER APPROVAL COMMITTEE; IVY INVESTMENT COMMITTEE; IVY STRATEGIC OPERATING COMMITTEE; FRANK BIONDI, JR.; NICHOLAS DONOFRIO; EDMUND KELLY; MICHAEL KOWALSKI; JOHN LUKE, JR.; PAUL MYNERS; MARK NORDENBERG; CATHERINE REIN; WILLIAM RICHARDSON; BRIAN ROBERTS; SAMUEL SCOTT, III; RICHARD VAUGHAN; WESLEY VON SCHACK; and BANK OF NEW YORK MELLON CORPORATION RISK COMMITTEE, Defendants.

3 TABLE OF CONTENTS I. NATURE OF CASE 1 II. JURISDICTION 4 III. VENUE 4 IV. PARTIES 4 A. Plaintiffs 4 B. Defendants 8 V. FACTUAL ALLEGATIONS 41 A. The Investments in Madoff Indirect Investments in Madoff via the Income-Plus Investment Fund Direct Investment of Plaintiffs Plans Assets in Limited Volatility Equity 43 B. Facts Bearing on Defendants Fiduciary Status Jeanneret Defendants Fiduciary Status Ivy Defendants Fiduciary Status 50 VI. FACTS BEARING ON FIDUCIARY BREACH 64 A. Madoff s Ponzi Scheme 65 B. Defendants Caused Plaintiffs Losses by Failing to Heed Red Flags Regarding Madoff 67 C. The Jeanneret and Ivy Defendants Failed to Identify and Act on the Red Flags and Thereby Breached Their Fiduciary Duties 73 VII. FIRST CLAIM FOR RELIEF 74 Claim for Breach of Fiduciary Duty By All Plaintiffs Against the Jeanneret Defendants and Ivy Defendants Breach of Duty of Loyalty [ERISA 404(a)(1), 409, 502(a)(2), 29 U.S.C. 1104(a)(1), 1109, 1132(a)(2)] i

4 VIII. SECOND CLAIM FOR RELIEF 75 Claim for Breach of Fiduciary Duty By All Plaintiffs Against the Jeanneret Defendants and Ivy Defendants Imprudent Investment of Plan Assets [ERISA 404(a)(1)(B), 409, 502(a)(2), 29 U.S.C. 1104(a)(1), 1109, 1132(a)(2)] IX. THIRD CLAIM FOR RELIEF 76 Claim for Breach of Fiduciary Duty By Income-Plus Plaintiffs Against the Jeanneret Defendants and Ivy Defendants Failure to Act in Accordance with Documents and Instruments Governing the Plan [ERISA 404(a)(1)(D), 409, 502(a)(2), 29 U.S.C. 1104(a)(1), 1109, 1132(a)(2)] X. FOURTH CLAIM FOR RELIEF 78 Claim for Violation of ERISA s Prohibited Transaction Provisions By All Plaintiffs Against the Jeanneret Defendants and Ivy Defendants [ERISA 406(a), 409, 502(a)(2) 502(a)(3), 29 U.S.C. 1106(a), 1109, 1132(a)(2), 1132(a)(3)] XI. FIFTH CLAIM FOR RELIEF 79 Claim for Co-Fiduciary Liability By All Plaintiffs Against the Jeanneret Defendants and Ivy Defendants [ERISA 405(a), 409, 502(a)(2), 29 U.S.C. 1105, 1109, 1132(a)(2)] XII. SIXTH CLAIM FOR RELIEF 80 Claim for Disgorgement of Profits By All Plaintiffs Against the Ivy Defendants [ERISA 409, 502(a)(3), 29 U.S.C. 1109, 1132(a)(3)] XIII. SEVENTH CLAIM FOR RELIEF 81 Claim for Injunctive Relief by the Income-Plus Plaintiffs Against the Jeanneret Defendants [ERISA 409, 502(a)(2), 29 U.S.C. 1109, 1132(a)(3)] XIV. PRAYER FOR RELIEF 82 ii

5 Plaintiffs Ernest A. Hartman and Kimberly A. Bautista as trustees of the IBEW Local 139 Pension Fund; James F. Collins and Kimberly A. Bautista as trustees of the IBEW Local 325 Pension Fund, the IBEW Local 325 Annuity Fund, and the IBEW Local 325 Joint Trust Fund; Michael Talarski and Kimberly A. Bautista as trustees of the IBEW Local 241 Pension Fund; Elizabeth F. Cassada and James A. Williams as trustees of the IBEW Local 910 Annuity Fund and the IBEW Local 910 Pension Fund; Thomas R. Lostracco as trustee of the SEIU 1199 Upstate Pension Fund; George Kennedy as trustee of the Service Employees Pension Fund of Upstate New York; Rodney Malarchik and Irving Wood as trustees of the Upstate New York Bakery Drivers and Industry Pension Fund; James Rounds and Lyle D. Fassett as trustees of the Plumbers and Pipefitters Local 112 Pension Fund; Rockne Burns as trustee of the Engineers Joint Welfare Fund; Carmen A. Serrett and Earl R. Hall as trustees of the Laborers Local 103 Annuity Fund; Carmen A. Serrett as trustee of the Laborers Local 103 Pension Fund; Patrick Morin and Dale Stuhlmiller as Trustees of the Empire State Carpenters Pension Fund, the Empire State Carpenters Annuity Fund, and the Empire State Carpenters Welfare Fund allege the following for their Complaint: I. NATURE OF CASE 1. Plaintiffs are trustees of multiemployer pension and other employee benefit plans ( the Plans ) established for the benefit of union-represented employees and their families. Plaintiffs claims under the Employee Retirement Income Security Act of 1974, as amended, 29 U.S.C et seq. ( ERISA ), arise out of the Defendant fiduciaries violations of their statutory duties of loyalty, care, skill, prudence, and diligence. Plaintiffs bring this action to recover for the Plans the Plans losses resulting from Defendant fiduciaries breaches of their duties. 1

6 2. Through the actions of Defendants (both fiduciary and nonfiduciary), each of the Plans invested plan assets in entities associated with Bernard L. Madoff ( Madoff ) via one or both of the following methods: 1) through the Income-Plus Investment Fund ( Income-Plus ), a tax-exempt group trust which pooled employee pension and profit sharing plans assets for investment purposes; and 2) through Limited Volatility Equity, a purported investment strategy run by Madoff. 3. Defendants J. P. Jeanneret Associates, Inc. and its managers, including its founder, Dr. John P. Jeanneret, and Paul Perry, collectively the Jeanneret Defendants, served as investment managers and outside fiduciaries for the Plans with regard to the Plans investments in Income-Plus and Limited Volatility Equity. 4. Defendant Ivy Asset Management LLC ( Ivy ), a wholly-owned subsidiary of Defendant Bank of New York Mellon Corp., served as an investment adviser for Income-Plus and received fees or other compensation from Plan assets for its services as such. On information and belief, pursuant to an agreement with Jeanneret Associates, Ivy also provided investment advice with respect to the investment of the Plans assets in Limited Volatility Equity in exchange for fees. The Individual Ivy Defendants (listed below) and the Bank of New York Mellon Corp. determined the investment advice given by Ivy. Consequently, each of these Defendants (referred to collectively herein as the Ivy Defendants ) was also a fiduciary with respect to the Plans. 5. By directing or advising the investment of the Plans assets in Madoff-related entities, the Ivy and Jeanneret Defendants breached their fiduciary duties, including but not limited to the duty to act solely in the interests of the Plans participants and beneficiaries and the duty to act with care, skill, prudence, and diligence. 2

7 6. Had Defendants acted prudently by engaging in the thorough and independent investigation and analysis required of fiduciaries by ERISA, they would have been alerted to numerous red flags that highlighted the imprudence of investing in Madoff-related entities. Some examples of these red flags include the following: 1) Madoff s high returns were implausibly consistent; 2) such returns could not be replicated or simulated; 3) no firm operating a similar strategy had the same level of success; 4) the stock holdings that Bernard Madoff Investment Securities LLC ( BMIS ) reported to the SEC did not comport with the size of the fund Madoff purportedly managed for clients; 5) Madoff conducted his strategy in an unusually secretive and non-transparent manner; 6) Madoff lacked an independent prime broker or custodian; and 7) his complicated, multi-billion dollar strategy was audited by a 3-person company in a 13 x 18 foot office. 7. In dereliction of their fiduciary duties, Defendants failed to identify and act on these red flags and instead placed, maintained, recommended, and/or allowed the Plans assets to be invested in Madoff-related entities while receiving substantial fees. The Ivy Defendants and the Jeanneret Defendants calculated and received their fees according to falsely inflated dollar amounts reported by Madoff. By breaching their fiduciary duties, Defendants caused significant losses to the Plans. 8. This action seeks relief against Defendants pursuant to ERISA 409, 502(a)(2) and (a)(3), 29 U.S.C. 1109, 1132(a)(2) and (a)(3), to make the Plans whole for the losses suffered as a result of Defendants breaches and to disgorge the profits and fees that the Defendants received based on the Plans investments in Madoff-related entities. Because the violations alleged herein caused losses to the Plans and because ERISA authorizes plan 3

8 fiduciaries to sue for plan-wide relief for breaches of fiduciary duty by other fiduciaries, Plaintiffs bring this action to recover losses to the Plans. II. JURISDICTION 9. Plaintiffs bring this action for declaratory, equitable, and monetary relief pursuant to ERISA 502(a)(2) and (a)(3), 29 U.S.C. 1132(a)(2) and (a)(3). This Court has subject matter jurisdiction over Plaintiffs claims under ERISA 502(e) and (f), 29 U.S.C. 1132(e) and (f), and 28 U.S.C III. VENUE 10. Venue is proper in this District pursuant to ERISA 502(e)(2), 29 U.S.C. 1132(e)(2), because one or more of the Defendants resides or may be found in this District and some of the breaches alleged took place in this District. IV. PARTIES A. Plaintiffs 11. Plaintiffs Ernest A. Hartman and Kimberly A. Bautista are trustees of the International Brotherhood of Electrical Workers ( IBEW ) 139 Pension Fund and are named fiduciaries of the IBEW Local 139 Pension Fund pursuant to ERISA 3(21)(A), 29 U.S.C. 1002(21)(A). At all relevant times, a portion of the IBEW Local 139 Pension Fund has been invested in Income-Plus. 12. Plaintiffs Kimberly A. Bautista and Michael Talarski are trustees of the IBEW Local 241 Pension Fund and are named fiduciaries of the IBEW Local 241 Pension Fund pursuant to ERISA 3(21)(A), 29 U.S.C. 1002(21)(A). At all relevant times, a portion of the IBEW Local 241 Pension Fund has been invested in Income-Plus. 13. Plaintiffs James F. Collins and Kimberly A. Bautista are trustees of the IBEW Local Union 325 Annuity Fund and are named fiduciaries of the IBEW Local Union 325 4

9 Annuity Fund pursuant to ERISA 3(21)(A), 29 U.S.C. 1002(21)(A). At all relevant times, a portion of the IBEW Local Union 325 Annuity Fund has been invested in Income-Plus and/or in direct Madoff investments via Limited Volatility Equity. 14. Plaintiffs James F. Collins and Kimberly A. Bautista are trustees of the IBEW Local Union 325 Pension Fund and are named fiduciaries of the IBEW Local Union 325 Pension Fund pursuant to ERISA 3(21)(A), 29 U.S.C. 1002(21)(A). At all relevant times, a portion of the IBEW Local Union 325 Pension Fund has been invested in Income-Plus. 15. Plaintiffs James F. Collins and Kimberly A. Bautista are trustees of the IBEW Local Union 325 Joint Trust Fund and are named fiduciaries of the IBEW Local Union 325 Joint Trust Fund pursuant to ERISA 3(21)(A), 29 U.S.C. 1002(21)(A). At all relevant times, a portion of the IBEW Local Union 325 Joint Trust Fund has been invested in direct Madoff investments via Limited Volatility Equity. 16. Plaintiffs Elizabeth F. Cassada and James A. Williams are trustees of the IBEW Local 910 Annuity Fund and are named fiduciaries of the IBEW Local 910 Annuity Fund pursuant to ERISA 3(21)(A), 29 U.S.C. 1002(21)(A). At all relevant times, a portion of the IBEW Local 910 Annuity Fund has been invested in Income-Plus. 17. Plaintiffs Elizabeth F. Cassada and James A. Williams are trustees of the IBEW Local 910 Pension Fund and are named fiduciaries of the IBEW Local 910 Pension Fund pursuant to ERISA 3(21)(A), 29 U.S.C. 1002(21)(A). At all relevant times, a portion of the IBEW Local 910 Pension Fund has been invested in Income-Plus. 18. Plaintiff Thomas R. LoStracco is a trustee of the SEIU 1199 Upstate Pension Fund and is a named fiduciary of SEIU 1199 Upstate Pension Fund pursuant to ERISA 5

10 3(21)(A), 29 U.S.C. 1002(21)(A). At all relevant times, a portion of the SEIU 1199 Upstate Pension Fund has been invested in Income-Plus. 19. Plaintiff George Kennedy is a trustee of the Service Employees Pension Fund of Upstate New York and is a named fiduciary of the Service Employees Pension Fund of Upstate New York pursuant to ERISA 3(21)(A), 29 U.S.C. 1002(21)(A). At all relevant times, a portion of the Service Employees Pension Fund of Upstate New York has been invested in Income-Plus. 20. Plaintiffs Rodney Malarchik and Irving Wood are trustees of the Upstate New York Bakery Drivers and Industry Pension Fund and are named fiduciaries of the Upstate New York Bakery Drivers and Industry Pension Fund pursuant ERISA 3(21)(A), 29 U.S.C. 1002(21)(A). At all relevant times, a portion of the Upstate New York Bakery Drivers and Industry Pension Fund has been invested in Income-Plus. 21. Plaintiffs James Rounds and Lyle D. Fassett are a trustees of the Plumbers and Pipefitters Local 112 Pension Fund and are named fiduciaries of the Plumbers and Pipefitters Local 112 Pension Fund pursuant to ERISA 3(21)(A), 29 U.S.C. 1002(21)(A). At all relevant times, a portion of the Plumbers and Pipefitters Local 112 Pension Fund has been invested in direct Madoff investments via Limited Volatility Equity. 22. Plaintiff Rockne Burns is a trustee of the Engineers Joint Welfare Fund and is a named fiduciary of the Engineers Joint Welfare Fund pursuant to ERISA 3(21)(A), 29 U.S.C. 1002(21)(A). At all relevant times, a portion of the Engineers Joint Welfare Fund has been invested in direct Madoff investments via Limited Volatility Equity. 23. Plaintiffs Carmen A. Serrett and Earl R. Hall are trustees of the Laborers Local 103 Annuity Fund and are named fiduciaries of the Laborers Local 103 Annuity Fund pursuant 6

11 to ERISA 3(21)(A), 29 U.S.C. 1002(21)(A). At all relevant times, a portion of the Laborers Local 103 Annuity Fund has been invested in Income-Plus. 24. Plaintiff Carmen A. Serrett is a trustee of the Laborers Local 103 Pension Fund and is a named fiduciary of the Laborers Local 103 Pension Fund pursuant to ERISA 3(21)(A), 29 U.S.C. 1002(21)(A). At all relevant times, a portion of the Laborers Local 103 Pension Fund has been invested in Income-Plus. 25. Plaintiffs Patrick Morin and Dale Stuhlmiller are trustees of the Empire State Carpenters Pension Fund and are named fiduciaries of the Empire State Carpenters Pension Fund pursuant to ERISA 3(21)(A), 29 U.S.C. 1002(21)(A). At all relevant times, a portion of the Empire State Carpenters Pension Fund has been invested in Income-Plus and/or in direct Madoff investments via Limited Volatility Equity. 26. Plaintiffs Patrick Morin and Dale Stuhlmiller are trustees of the Empire State Carpenters Annuity Fund and are named fiduciaries of the Empire State Carpenters Annuity Fund pursuant to ERISA 3(21)(A), 29 U.S.C. 1002(21)(A). At all relevant times, a portion of the Empire State Carpenters Annuity Fund has been invested in Income-Plus and/or in direct Madoff investments via Limited Volatility Equity. 27. Plaintiffs Patrick Morin and Dale Stuhlmiller are Trustees of the Empire State Carpenters Welfare Fund and are named fiduciaries of the Empire State Carpenters Welfare Fund pursuant to ERISA 3(21)(A), 29 U.S.C. 1002(21)(A). At all relevant times, a portion of the Empire State Carpenters Welfare Fund has been invested in direct Madoff investments via Limited Volatility Equity. 28. At all relevant times, the Plans were employee benefit plan[s] within the meaning of ERISA 3(3), 29 U.S.C. 1002(3). 7

12 B. Defendants 29. Nominal Defendant Income-Plus Investment Fund ( Income-Plus ) pooled and commingled qualifying employee pension and profit sharing plans assets for investment purposes. On information and belief, Income-Plus is a tax-exempt group trust under Internal Revenue Code 501(a) pursuant to the principles of Rev. Rul , , C.B At all relevant times, the assets of each of the Plans that were invested through Income-Plus retained their identities as plan assets pursuant to ERISA 3(42), 29 U.S.C. 1002(42). At all relevant times, Income-Plus invested plan assets directly or indirectly in Madoff-related investments. Income-Plus is named as a Defendant only so that the Court can award complete relief, including equitable relief. 30. Defendant J.P. Jeanneret Associates, Inc. ( Jeanneret Associates ) is a New York corporation with its principal place of business at 100 East Washington Street, Syracuse, New York Jeanneret Associates is a registered Investment Adviser under the Investment Advisers Act of 1940, and provides investment management and consulting services to employee benefit plans. As explained in more detail below, Jeanneret Associates agreed in writing to serve as an investment manager to each of the Plans within the meaning of ERISA 3(38), 29 U.S.C. 1002(38) and acknowledged and agreed in writing that it is a fiduciary with respect to the Plans. As such, Jeanneret Associates was a fiduciary of each of the Plans that invested its assets through Income-Plus and/or Limited Volatility Equity, as alleged below. 31. In addition, Plaintiffs are informed and believe, and based thereon allege, that Jeanneret Associates was at all relevant times a fiduciary of each of the Plans under ERISA 3(21)(A), 29 U.S.C. 1002(21)(A), in that it acknowledged and agreed in writing that it is a fiduciary with respect to the Plans and had and/or exercised the responsibility to make decisions as to the Plans investments in Madoff-related investments and/or gave advice to the Plans to 8

13 make such investments in return for compensation from the Plans. As a result, Jeanneret Associates exercised discretionary authority or discretionary control respecting management of the Plans; had and/or exercised authority or control respecting management or disposition of the Plans assets; and/or rendered investment advice for a fee or other compensation, direct or indirect, with respect to moneys or other property of each Plan, or had authority or responsibility to do so; and/or had discretionary authority or discretionary responsibility in the administration of the Plans. 32. Defendant John P. Jeanneret ( Dr. Jeanneret ) is the founder, chief executive officer, and majority shareholder of Defendant J.P. Jeanneret Associates, Inc. As explained in more detail below, Dr. Jeanneret served as a fiduciary of each of the Plans pursuant to ERISA 3(21)(A), 29 U.S.C. 1002(21)(A), in that he directly and/or through Jeanneret Associates had and/or exercised the responsibility to make decisions as to the Plans investments in Madoffrelated investments and/or gave advice to the Plans to make such investments in return for compensation from the Plans. As a result, Dr. Jeanneret exercised discretionary authority or discretionary control respecting management of the Plans; had and/or exercised authority or control respecting management or disposition of the Plans assets; and/or rendered investment advice for a fee or other compensation, direct or indirect, with respect to moneys or other property of each Plan, or had authority or responsibility to do so; and/or had discretionary authority or discretionary responsibility in the administration of the Plans. 33. Defendant Paul Perry was at some or all relevant times a director, vice president, and minority shareholder of Jeanneret Associates. As explained in more detail below, Defendant Perry served as a fiduciary to the Plans within the meaning of ERISA 3(21)(A), 29 U.S.C. 1002(21)(A), in that he had and/or exercised the responsibility to make decisions as to 9

14 the Plans investments in Madoff-related investments and/or gave advice to the Plans to make such investments in return for compensation from the Plans. As a result, Defendant Perry exercised discretionary authority or discretionary control respecting management of the Plans; had and/or exercised authority or control respecting management or disposition of the Plans assets; and/or rendered investment advice for a fee or other compensation, direct or indirect, with respect to moneys or other property of each Plan, or had authority or responsibility to do so; and/or had discretionary authority or discretionary responsibility in the administration of the Plans. 34. Defendants Jeanneret Associates, Dr. Jeanneret, and Paul Perry are collectively referred to as the Jeanneret Defendants. 35. Each of the Jeanneret Defendants is a party in interest pursuant to ERISA 3(14)(A), (B), and (H), 29 U.S.C. 1002(14)(A), (B), and (H), because each was a fiduciary of the Plans and/or provided services to each of the Plans and/or was an employee, officer, or director of a person providing services to each of the Plans. 36. Defendant Ivy Asset Management LLC ( Ivy ) is a Delaware limited liability company with its principal place of business at One Jericho Plaza, Jericho, New York Ivy is a registered Investment Adviser under the Investment Advisers Act of Until January 1, 2009, Ivy was a Delaware corporation under the name Ivy Asset Management Corp. As explained in more detail below, Ivy served as an investment adviser to each of the Plans because it gave advice to Jeanneret Associates with regard to the investment of Plan assets in Income- Plus and/or Limited Volatility Equity in exchange for a fee. As such, Defendant Ivy was at some or all relevant times a fiduciary of each of the Plans within the meaning of ERISA 3(21)(A), 29 U.S.C. 1002(21)(A), in that it rendered investment advice for a fee or other compensation, 10

15 direct or indirect, with respect to moneys or other property of each Plan. In addition, Plaintiffs are informed and believe, and based thereon allege, that Ivy exercised discretionary authority or discretionary control respecting management of the Plans, and/or exercised authority or control respecting management or disposition of the Plans assets, or had authority or responsibility to do so, and/or had discretionary authority or discretionary responsibility in the administration of the Plans. 37. Defendant The Bank of New York Mellon Corporation ( BNYM ) is a Delaware corporation headquartered at One Wall Street, New York, NY BNYM, formerly known as The Bank of New York Company, Inc. ( BNYCo. ), became Ivy s parent company on October 3, 2000, when it acquired 100% of Ivy s outstanding stock. BNYCo. merged with Mellon Financial Corporation of Pittsburgh in July 2007 and became BNYM. A. On information and belief, the structure of BNYM s ownership of Ivy changed after Ivy s reorganization as a limited liability company on January 1, After that date, BNYM indirectly owned Ivy via two entities: Alternative Holdings I, LLC, a Delaware limited liability company, and Alternative Holdings II, LLC, also a Delaware limited liability company. Under this structure, BNYM owns 100% of Alternative Holdings II, which owns 100% of Alternative Holdings I, which owns 100% of Ivy. BNYM thus indirectly owns 100% of Ivy. B. As explained in more detail below, Plaintiffs are informed and believe that Defendant BNYM had the power to exercise, and did exercise, a controlling influence over Ivy s investment management policies and fiduciary activities. For example, Defendant BNYM controlled or otherwise acted in concert with Ivy through its ownership of Ivy, the service of BNYM executives on Ivy s Board of Directors, and the 11

16 activities and oversight exercised by BNYM s Risk Committee. Thus, BNYM was at some or all relevant times a fiduciary of the Plans within the meaning of ERISA 3(21)(A), 29 U.S.C. 1002(21)(A), as it exercised discretionary authority or discretionary control respecting management of the Plans, and/or exercised authority or control respecting management or disposition of the Plans assets, and/or rendered investment advice for a fee or other compensation, direct or indirect, with respect to moneys or other property of each Plan, or had authority or responsibility to do so and/or had discretionary authority or discretionary responsibility in the administration of the Plans. 38. On information and belief, based on Defendant Ivy s Part II, Form ADV filings with the Securities and Exchange Commission, Defendant Ivy Manager Approval Committee, at some or all relevant times, approved all new investment managers. On information and belief, at some or all relevant times, Defendants Joseph Burns, Alan Chuang, Sean Cumiskey, Stuart Davies, Adam Geiger, Robert Meschi, Peter Rose, Mark Santero, Lawrence Simon, Sean Simon, Howard Wohl, and Gregory van Inwegen served on the Manager Approval Committee. As explained in more detail below, the Manager Approval Committee and its members served as fiduciaries to the Plans pursuant to ERISA 3(21)(A), 29 U.S.C. 1002(21)(A), in that they exercised discretionary authority or discretionary control respecting management of the Plans funds, and/or exercised authority or control respecting management or disposition of the Plans assets, and/or rendered investment advice for a fee or other compensation, direct or indirect, with respect to moneys or other property of each Plan, and/or had discretionary authority or discretionary responsibility in the administration of the Plans. As such, the Manager Approval Committee and its members were fiduciaries of each of the Plans as alleged below. 12

17 39. On information and belief, based on Defendant Ivy s Part II, Form ADV filings with the Securities and Exchange Commission, Defendant Ivy Investment Committee, at some or all relevant times, approved all new investment managers, reviewed the risk profile of approved managers, removed managers from the approved list, and set investment parameters for Ivy s portfolios, among other things. On information and belief, at some or all relevant times, Defendants Joseph Burns, Alan Chuang, Sean Cumiskey, Stuart Davies, Farzine Hachemian, Robert Meschi, Peter Noris, and Gregory van Inwegen served on the Investment Committee. Additionally, at some or all relevant times, Defendants Sean Simon and Michael Singer served as non-voting advisory members of the Investment Committee, who had veto power over the committee s decisions in circumstances where they deemed necessary. As explained in more detail below, at some or all relevant times, the Ivy Investment Committee and its members served as fiduciaries of the Plans pursuant to ERISA 3(21)(A), 29 U.S.C. 1002(21)(A), in that they exercised discretionary authority or discretionary control respecting management of the Plans funds, and/or exercised authority or control respecting management or disposition of the Plans assets, and/or rendered investment advice for a fee or other compensation, direct or indirect, with respect to moneys or other property of each Plan, and/or had discretionary authority or discretionary responsibility in the administration of the Plans. As such, the Ivy Investment Committee and its members were fiduciaries of each of the Plans as alleged below. 40. On information and belief, based on Defendant Ivy s Part II, Form ADV filings with the Securities and Exchange Commission, at some or all relevant times Defendant Ivy Strategic Operating Committee managed the business operations of Defendant Ivy and was responsible for entering into investment advisory agreements, establishing investment advisory fees, and selecting investment managers. On information and belief, at some or all relevant 13

18 times, Defendants Adam Geiger, Sean Simon, and Michael Singer served on the Strategic Operating Committee. At some or all relevant times, the Ivy Strategic Operating Committee and its members served as fiduciaries of the Plans pursuant to ERISA 3(21)(A), 29 U.S.C. 1002(21)(A), in that they exercised discretionary authority or discretionary control respecting management of the Plans funds, and/or exercised authority or control respecting management or disposition of the Plans assets, and/or rendered investment advice for a fee or other compensation, direct or indirect, with respect to moneys or other property of each Plan, and/or had discretionary authority or discretionary responsibility in the administration of the Plans. As such, the Ivy Strategic Operating Committee, and its members were fiduciaries of each of the Plans as alleged below. 41. On information and belief, based in part upon BNYM and BNYCo. s websites and the companies filings with the Securities and Exchange Commission, Defendant BNYM (formerly BNYCo.) Risk Committee (hereinafter, Risk Committee ) was responsible for overseeing the fiduciary activities of BNYM s (formerly BNYCo. s) subsidiaries, including Ivy; reviewing fiduciary risks at BNYM; reviewing reports on the fiduciary activities of BNYM s businesses; providing general oversight of BNYM s investment of fiduciary assets; and adopting BNYM s fiduciary policy statement and considering other policies of BNYM s subsidiaries (including Ivy) concerning fiduciary activities. On information and belief, at some or all relevant times Defendants Frank J. Biondi, Jr., Nicholas M. Donofrio, Edmund F. Kelly, Michael J. Kowalski, John A. Luke, Jr., Paul Myners, Mark A. Nordenberg, Catherine A. Rein, William C. Richardson, Brian L. Roberts, Samuel C. Scott, III, Richard C. Vaughan, and Wesley W. von Schack served on the Risk Committee. As explained in more detail below, at some or all relevant times, the Risk Committee and its members served as fiduciaries of the Plans pursuant 14

19 to ERISA 3(21)(A), 29 U.S.C. 1002(21)(A), in that they exercised discretionary authority or discretionary control respecting management of the Plans funds, and/or exercised authority or control respecting management or disposition of the Plans assets, and/or rendered investment advice for a fee or other compensation, direct or indirect, with respect to moneys or other property of each Plan, and/or had discretionary authority or discretionary responsibility in the administration of the Plans. As such, the Risk Committee and each of its members were fiduciaries of each of the Plans as alleged below. 42. Defendants Ivy Manager Approval Committee, Ivy Investment Committee, Ivy Strategic Operating Committee, and the Risk Committee are collectively referred to as the Ivy Committee Defendants. 43. On information and belief, at some or all relevant times, Defendants Colleen Baldwin, Glenn Cummins, Adam Geiger, Jeffrey Lindenbaum, John Rogers, Lawrence Simon, Sean Simon, and Howard Wohl served as Ivy Executives. On information and belief, based on Ivy s Part II, Form ADV filings with the Securities and Exchange Commission, the Ivy Executives were responsible for Ivy s day-to-day operations, which included entering into investment advisory agreements, establishing investment advisory fees, selecting investment managers, and developing new products and services. 44. On information and belief, Defendant Colleen Baldwin, at some or all relevant times, served as Ivy s Chief Operating Officer and was an Ivy Executive. On further information and belief, Defendant Baldwin s responsibilities included developing customized products for Ivy s clients and managing Ivy s global business operations, including fund accounting, finance, legal and compliance, information technology, human resources, and administration. Plaintiffs are informed and believe that as an Ivy Executive, Defendant Baldwin was responsible for 15

20 entering into investment advisory agreements, establishing investment advisory fees, selecting investment managers, and developing new products and services. As such, Defendant Baldwin served as a fiduciary of the Plans pursuant to ERISA 3(21)(A), 29 U.S.C. 1002(21)(A), in that she exercised discretionary authority or discretionary control respecting management of the Plans funds, and/or exercised authority or control respecting management or disposition of the Plans assets, and/or rendered investment advice for a fee or other compensation, direct or indirect, with respect to moneys or other property of each Plan, and/or had discretionary authority or discretionary responsibility in the administration of the Plans. 45. On information and belief, Defendant Kevin Bannon, at some or all relevant times, served on Ivy s Board of Directors. On information and belief, at or about the same time, he also served as Bank of New York s Chief Investment Officer and as chairman of the Bank of New York s Investment Policy Committee. On information and belief, based on Ivy s Part II, Form ADV filings with the Securities and Exchange Commission, Defendant Bannon determined the investment advice Ivy gave to clients. As such, Defendant Bannon served as a fiduciary of the Plans pursuant to ERISA 3(21)(A), 29 U.S.C. 1002(21)(A), in that he exercised discretionary authority or discretionary control respecting management of the Plans funds, and/or exercised authority or control respecting management or disposition of the Plans assets, and/or rendered investment advice for a fee or other compensation, direct or indirect, with respect to moneys or other property of each Plan, and/or had discretionary authority or discretionary responsibility in the administration of the Plans. 46. On information and belief, Defendant Frank J. Biondi, Jr., at some or all relevant times, served as a director at BNYM and as a member of the Risk Committee. As a member of the Risk Committee and as explained in more detail below, Plaintiffs are informed and believe 16

21 that Defendant Biondi s responsibilities included overseeing the fiduciary activities of BNYM s subsidiaries, including Ivy; reviewing fiduciary risks at BNYM; reviewing reports on the fiduciary activities of BNYM s businesses; providing general oversight of BNYM s investment of fiduciary assets; and adopting BNYM s fiduciary policy statement and considering other policies of BNYM s subsidiaries (including Ivy) concerning fiduciary activities. As such, Defendant Biondi served as a fiduciary of the Plans pursuant to ERISA 3(21)(A), 29 U.S.C. 1002(21)(A), in that he exercised discretionary authority or discretionary control respecting management of the Plans funds, and/or exercised authority or control respecting management or disposition of the Plans assets, and/or rendered investment advice for a fee or other compensation, direct or indirect, with respect to moneys or other property of each Plan, and/or had discretionary authority or discretionary responsibility in the administration of the Plans. 47. On information and belief, Defendant Joseph Burns, at some or all relevant times, served as Ivy s Director of Investments and as the Strategy Head of Long/Short Equity. On information and belief, at some or all relevant times, Defendant Burns was also a member of Ivy s Manager Approval Committee and Investment Committee. Plaintiffs are informed and believe that, as a member of the Manager Approval Committee and the Investment Committee, Defendant Burns was responsible for approving all new investment managers; reviewing the risk profile of approved managers; removing managers from the approved list; and setting investment parameters for Ivy s portfolios. As such, Defendant Burns served as a fiduciary of the Plans pursuant to ERISA 3(21)(A), 29 U.S.C. 1002(21)(A), in that he exercised discretionary authority or discretionary control respecting management of the Plans funds, and/or exercised authority or control respecting management or disposition of the Plans assets, and/or rendered investment advice for a fee or other compensation, direct or indirect, with respect to moneys or 17

22 other property of each Plan, and/or had discretionary authority or discretionary responsibility in the administration of the Plans. 48. On information and belief, Defendant Alan Chuang, at some or all relevant times, served as Ivy s Director, Investments; Head of Portfolio Management; and as a member of Ivy s Manager Approval Committee and the Investment Committee. Plaintiffs are informed and believe, based upon Ivy s website information and Part II, Form ADV filings with the Securities and Exchange Commission, that as a member of Ivy s Investment Department, the Investment Committee, and the Manager Approval Committee, Defendant Chuang had responsibility for identifying, approving, recommending, or selecting Ivy s investment managers; conducting due diligence on prospective investment managers, including performing in-depth follow-up calls, on-site visits, analysis of portfolio composition, statistical analysis of performance history, and peer comparisons, reviewing documents and financial statements in detail, and verifying investment managers backgrounds; reviewing the risk profile of approved managers; removing managers from the approved list; and setting investment parameters for Ivy s portfolios. As such, Defendant Chuang served as a fiduciary of the Plans pursuant to ERISA 3(21)(A), 29 U.S.C. 1002(21)(A), in that he exercised discretionary authority or discretionary control respecting management of the Plans funds, and/or exercised authority or control respecting management or disposition of the Plans assets, and/or rendered investment advice for a fee or other compensation, direct or indirect, with respect to moneys or other property of each Plan, and/or had discretionary authority or discretionary responsibility in the administration of the Plans. 49. On information and belief, Defendant Sean Cumiskey, at some or all relevant times, acted as Ivy s Managing Director, Investments; headed Ivy s Investment Strategies 18

23 Group; and served as a member of Ivy s Executive Committee. On information and belief, at some or all relevant times, Defendant Cumiskey served on Ivy s Manager Approval Committee, Investment Committee, and Investment Risk Management Committee. Plaintiffs are informed and believe that, in these roles, Defendant Cumiskey was responsible for approving all new investment managers; reviewing the risk profile of approved managers; removing managers from the approved list; setting investment parameters for Ivy s portfolios; developing, implementing, and enforcing investment risk management policies and procedures; reviewing and updating the manager risk profiles; monitoring adherence to the policies; and maintaining final accountability for all portfolio allocations. As such, Defendant Cumiskey served as a fiduciary of the Plans pursuant to ERISA 3(21)(A), 29 U.S.C. 1002(21)(A), in that he exercised discretionary authority or discretionary control respecting management of the Plans funds, and/or exercised authority or control respecting management or disposition of the Plans assets, and/or rendered investment advice for a fee or other compensation, direct or indirect, with respect to moneys or other property of each Plan, and/or had discretionary authority or discretionary responsibility in the administration of the Plans. 50. On information and belief, Defendant Glenn Cummins, at some or all relevant times, served as Ivy s Managing Director, Finance and Chief Financial Officer, and was an Ivy Executive. Plaintiffs are informed and believe that, as an Ivy Executive, Defendant Cummins was responsible for entering into investment advisory agreements, establishing investment advisory fees, selecting investment managers, and developing new products and services. As such, Defendant Cummins served as a fiduciary to the Plans pursuant to ERISA 3(21)(A), 29 U.S.C. 1002(21)(A), in that he exercised discretionary authority or discretionary control respecting management of the Plans funds, and/or exercised authority or control respecting 19

24 management or distribution of the Plans assets, and/or rendered investment advice for a fee or other compensation, direct or indirect, with respect to any moneys or other property of such Plan, and/or had discretionary authority or discretionary responsibility in the administration of the Plans. 51. On information and belief, Defendant Stuart Davies, at some or all relevant times, served as Ivy s Managing Director, Investments and served as Global Head of Investments. On information and belief, at some or all relevant times Defendant Davies managed the Global Investments Division, which was responsible for manager research, portfolio construction, and investment management. On further information and belief, Defendant Davies was a member of Ivy s Investment Risk Management Committee, Manager Approval Committee, and Investment Committee. Plaintiffs are informed and believe that, as a member of these committees, Defendant Davies was responsible for approving all new investment managers; reviewing the risk profile of approved managers; removing managers from the approved list; setting investment parameters for Ivy s portfolios; developing, implementing, and enforcing investment risk management policies and procedures; reviewing and updating the risk profiles of investment managers; monitoring adherence to the policies; and maintaining final accountability for all portfolio allocations. As such, Defendant Davies served as a fiduciary of the Plans pursuant to ERISA 3(21)(A), 29 U.S.C. 1002(21)(A), in that he exercised discretionary authority or discretionary control respecting management of the Plans funds, and/or exercised authority or control respecting management or disposition of the Plans assets, and/or rendered investment advice for a fee or other compensation, direct or indirect, with respect to moneys or other property of each Plan, and/or had discretionary authority or discretionary responsibility in the administration of the Plans. 20

25 52. On information and belief, Defendant Nicholas M. Donofrio, at some or all relevant times, served as a director at BNYM (formerly BNYCo.) and as the chair of the Risk Committee. Plaintiffs are informed and believe that, as a member of the Risk Committee and as explained in more detail below, Defendant Donofrio s responsibilities included overseeing the fiduciary activities of BNYM s subsidiaries, including Ivy; reviewing fiduciary risks at BNYM; reviewing reports on the fiduciary activities of BNYM s businesses; providing general oversight of BNYM s investment of fiduciary assets; and adopting BNYM s fiduciary policy statement and considering other policies of BNYM s subsidiaries (including Ivy) concerning fiduciary activities. As such, Defendant Donofrio served as a fiduciary of the Plans pursuant to ERISA 3(21)(A), 29 U.S.C. 1002(21)(A), in that he exercised discretionary authority or discretionary control respecting management of the Plans funds, and/or exercised authority or control respecting management or disposition of the Plans assets, and/or rendered investment advice for a fee or other compensation, direct or indirect, with respect to moneys or other property of each Plan, and/or had discretionary authority or discretionary responsibility in the administration of the Plans. 53. On information and belief, Defendant Adam Geiger, at some or all relevant times, served as Chief Investment Officer; Ivy s Managing Director, Investments; Director, Investments; and as an Ivy Executive. On information and belief, at some or all relevant times, Defendant Geiger also served as a member of the Strategic Operating Committee and the Manager Approval Committee. Plaintiffs are informed and believe that in these roles and as a member of Ivy s Investment Department, Defendant Geiger was responsible for: reviewing portfolios to make sure that they were consistent with investment objectives and guidelines, and/or consistent with the client s advisory contracts and instructions to Ivy; approving, 21

26 selecting, identifying, or recommending investment managers; entering into investment advisory agreements; establishing investment advisory fees; conducting due diligence on prospective investment managers, including performing in-depth follow-up calls, on-site visits, analysis of portfolio composition, statistical analysis of performance history, and peer comparisons; reviewing documents and financial statements in detail; verifying investment managers backgrounds; and conducting manager research, due diligence and monitoring, portfolio construction and investment management, and quantitative research and risk management. On further information and belief, based on Ivy s Part II, Form ADV filings with the Securities and Exchange Commission, Defendant Geiger determined the investment advice Ivy gave to clients. As such, during his time at Ivy, Defendant Geiger served as a fiduciary of the Plans pursuant to ERISA 3(21)(A), 29 U.S.C. 1002(21)(A), in that he exercised discretionary authority or discretionary control respecting management of the Plans funds, and/or exercised authority or control respecting management or disposition of the Plans assets, and/or rendered investment advice for a fee or other compensation, direct or indirect, with respect to any moneys or other property of such Plan, and/or had discretionary authority or discretionary responsibility in the administration of the Plans. 54. On information and belief, Defendant Farzine Hachemian, at some or all relevant times, was a member of the Investment Risk Management Committee and the Investment Committee, and served as Director, Investments. Plaintiffs are informed and believe that, as a member of the Investment Risk Management Committee and the Investment Committee, Defendant Hachemian was responsible for developing, implementing, and enforcing investment risk management policies and procedures; reviewing and updating manager risk profiles; monitoring adherence to the policies; maintaining final accountability for all portfolio 22

27 allocations; approving all new investment managers; reviewing the risk profile of approved managers; removing managers from the approved list; and setting investment parameters for Ivy s portfolios. As such, Defendant Hachemian served as a fiduciary of the Plans pursuant to ERISA 3(21)(A), 29 U.S.C. 1002(21)(A), in that he exercised discretionary authority or discretionary control respecting management of the Plans funds, and/or exercised authority or control respecting management or disposition of the Plans assets, and/or rendered investment advice for a fee or other compensation, direct or indirect, with respect to moneys or other property of each Plan, and/or had discretionary authority or discretionary responsibility in the administration of the Plans. 55. On information and belief, Defendant Edmund F. Ted Kelly, at some or all relevant times, served as a director at BNYM and as a member of the Risk Committee. As a member of the Risk Committee and as explained in more detail below, Plaintiffs are informed and believe that Defendant Kelly s responsibilities included overseeing the fiduciary activities of BNYM s subsidiaries, including Ivy; reviewing fiduciary risks at BNYM; reviewing reports on the fiduciary activities of BNYM s businesses; providing general oversight of BNYM s investment of fiduciary assets; and adopting BNYM s fiduciary policy statement and considering other policies of BNYM s subsidiaries (including Ivy) concerning fiduciary activities. As such, Defendant Kelly served as a fiduciary of the Plans pursuant to ERISA 3(21)(A), 29 U.S.C. 1002(21)(A), in that he exercised discretionary authority or discretionary control respecting management of the Plans funds, and/or exercised authority or control respecting management or disposition of the Plans assets, and/or rendered investment advice for a fee or other compensation, direct or indirect, with respect to moneys or other property of each Plan, and/or had discretionary authority or discretionary responsibility in the administration of the Plans. 23

28 56. On information and belief, Defendant Michael J. Kowalski, at some or all relevant times, served as a director at BNYM and as a member of the Risk Committee. As a member of the Risk Committee and as explained in more detail below, Plaintiffs are informed and believe that Defendant Kowalski s responsibilities included overseeing the fiduciary activities of BNYM s subsidiaries, including Ivy; reviewing fiduciary risks at BNYM; reviewing reports on the fiduciary activities of BNYM s businesses; providing general oversight of BNYM s investment of fiduciary assets; and adopting BNYM s fiduciary policy statement and considering other policies of BNYM s subsidiaries (including Ivy) concerning fiduciary activities. As such, Defendant Kowalski served as a fiduciary of the Plans pursuant to ERISA 3(21)(A), 29 U.S.C. 1002(21)(A), in that he exercised discretionary authority or discretionary control respecting management of the Plans funds, and/or exercised authority or control respecting management or disposition of the Plans assets, and/or rendered investment advice for a fee or other compensation, direct or indirect, with respect to moneys or other property of each Plan, and/or had discretionary authority or discretionary responsibility in the administration of the Plans. 57. On information and belief, Defendant Jeffrey Lindenbaum, at some or all relevant times, served as Ivy s Managing Director, Client Development Europe and Asia; Managing Director, Products and Markets; Chief Financial Officer; and as an Ivy Executive. Plaintiffs are informed and believe that, as an Ivy Executive, Defendant Lindenbaum was responsible for entering into investment advisory agreements, establishing investment advisory fees, selecting investment managers, and developing new products and services. At some or all relevant times, on information and belief based on Ivy s Part II, Form ADV filings with the Securities and Exchange Commission, Defendant Lindenbaum determined the investment advice Ivy gave to clients. As such, Defendant Lindenbaum served as a fiduciary of the Plans pursuant to ERISA 24