Scandal Has Some Plan Sponsors’ Hands Tied

And what little information plan sponsors do have to go on isn’t helping clear the waters. Reports from the Securities and Exchange Commission show the agency has subpoenaed some 88 mutual funds, and "found problems with many, but they haven’t said which ones they are, which leaves plan sponsors in a tough spot," according to Ferrigno.
Not knowing which plans are safe, plan sponsors may be flying blind in deciding whether to pull assets from certain funds. "Who’s to say they haven’t gone from the frying pan to the fire?" Ferrigno wondered. Further, pulling assets from a fund brings with it new concerns, he said.
"Some funds are also recordkeepers for the plan," he points out. "And firing a recordkeeper could lead to legal issues or even a plan blackout to convert to a new fund." Also, "if plan sponsors take investors’ money out of a fund without participants’ active consent, the plan sponsor has fiduciary responsibility for that money – which is tricky," he added.