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Oversight of the ERISA Fiduciary. April 9, 2008 J. David Thompson Bank of New York Mellon Corporation. Oversight of the ERISA Fiduciary Bank of New York Mellon - Fiduciary Profile. Operating in 34 countries and 54 cities. Serving more than 100 markets worldwide $1T Assets Under Management
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Oversight of the ERISA Fiduciary April 9, 2008 J. David Thompson Bank of New York Mellon Corporation
Oversight of the ERISA FiduciaryBank of New York Mellon - Fiduciary Profile • Operating in 34 countries and 54 cities. Serving more than 100 markets worldwide • $1T Assets Under Management • $23T Assets Under Custody/Administration • $11T Corporate Trustee Debt Outstanding
Oversight of the ERISA FiduciaryBank of New York Mellon - Management of Fiduciary Risk • Definition: Fiduciary Risk is the risk arising from not serving in the best interest of clients • in accordance with governing documents, prudent person principles and applicable • laws, rules and regulations. • Fiduciary Duties: • Putting client interests first with undivided loyalty • Acting with the utmost good faith and care • Acting impartially • Providing full and fair disclosure of all material facts • Protecting confidentiality • Exercising discretion in a prudent manner • Management and Oversight of Fiduciary Risk: • Managed by Line of Business and assisted by embedded Risk and Compliance Staffs • Overseen by Committees and Corporate Staff
Oversight of the ERISA FiduciaryBank of New York Mellon - Fiduciary Risk Oversight Model
Oversight of the ERISA FiduciaryBank of New York Mellon - Fiduciary Risk Management Committee • Duties: • Monitors and manages enterprise Fiduciary Risk • Approves Fiduciary Risk Management Policies and Processes • Oversees compliance with fiduciary regulations • Oversees adherence to investment guidelines • Approves business acceptance and administrative processes • Oversees management of investment volatility risk • Oversees Line of Business Administrative, Collective Funds, Proxy Policy, and Employer Stock Sub-Committees • Members: Senior Investment, Operations, Risk, Compliance, and Legal Officers • Meetings: Monthly or as necessary. Reports key takeaway items to Senior Risk • Management Committee.
Oversight of the ERISA FiduciaryBank of New York Mellon – Line of Business Administrative Committees • Duties: • Accepts standard and non-standard business • Non-standard business must be approved by Operations, Risk, Legal and Compliance • Approves changes to standard documents • Resolves or escalates operational, risk, legal or compliance issues • Members: Senior Business Line and Operations Officers. Advised by Risk, • Compliance and Legal Officers. • Meetings: Weekly or as necessary. Key takeaway items reported to Fiduciary Risk • Management Committee.
Oversight of the ERISA FiduciaryBank of New York Mellon - Collective Funds Committee • Duties: Oversees the management of all Collective Funds, Common Funds, • Collective Trusts and Pooled Employee Funds: • Approves the establishment, merger or closing of funds • Monitors dollar NAV fund market values • Resolves or escalates compliance, risk, and legal administrative issues • Manages external auditor relationship • Members: Senior Line of Business, Risk, Compliance and Legal Officers • Meetings: Weekly or as necessary. Key takeaway items reported to Fiduciary Risk • Management Committee.
Oversight of the ERISA FiduciaryBank of New York Mellon - Proxy Policy Committee • Duties: • Makes proxy voting decisions for securities held in fiduciary accounts • Establishes proxy voting policies, procedures, and guidelines and monitors adherence • Engages and monitors proxy voting agent • Approves exceptions to committee voting recommendations • Members: Senior Investment, Risk, Compliance and Legal Officers • Meetings:As determined by Committee Chair. Key takeaway items • reported to Fiduciary Risk Management Committee.
Oversight of the ERISA FiduciaryBank of New York Mellon - Employer Stock Committee • Duties: • Monitors Directed Trustee Accounts which hold Employer Securities • Ensures compliance with Department of Labor Field Assistance Bulletin • Resolves or escalates issues • Members: Line of Business, Risk, Compliance and Legal Officers • Meetings: Quarterly or as necessary. Key takeaway items reported to Fiduciary Risk • Management Committee.
Oversight of the ERISA FiduciaryBank of New York Mellon - Key Fiduciary Policies • Fiduciary responsibilities • Portfolio account review and investment guidelines • Use of derivatives in client accounts • Investment volatility management and oversight • Fiduciary purchases of securities underwritten by affiliates
Oversight of the ERISA FiduciaryBank of New York Mellon – Issues/Challenges • Identifying and monitoring all fiduciary activity throughout the enterprise • Writing and enforcing enterprise policies • Identifying and managing potential conflicts of interests • Keeping committee activities focused and efficient
Oversight of the ERISA Fiduciary • ? • Questions • ?