Colorado § 24-51-207 - Standard of conduct.

§ 24-51-207. Standard of conduct.

(1) The trustees of the board shall be held to the standard of conduct of a fiduciary specified in subsection (2) of this section in the discharge of their functions. Their functions shall include any duty, obligation, power, authority, responsibility, right, privilege, activity, or program specified in this article in connection with the association.

(2) (a) As fiduciaries, such trustees shall carry out their functions solely in the interest of the members and benefit recipients and for the exclusive purpose of providing benefits and defraying reasonable expenses incurred in performing such duties as required by law. The trustees shall act in accordance with the provisions of this article and with the care, skill, prudence, and diligence in light of the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims by diversifying the investments of the association so as to minimize the risk of large losses, unless in light of such circumstances it is clearly prudent not to do so.

(b) Notwithstanding the provisions of paragraph (a) of this subsection (2), the mere settlement or compromise of any dispute by the board pursuant to the authority granted under section 24-51-205 (3.5) is not per se a violation of the fiduciary duties of any trustee.

(c) Notwithstanding the provisions of paragraph (a) of this subsection (2), the consolidation or merger of a plan created under part 2 of article 64 of title 22, C.R.S., prior to its repeal in 2010, into the association and the board's administration of that division following the effective date of the merger shall not be considered a breach of the board's duties or standards of conduct. No claims shall lie against the board, association, or the trustees arising from the consolidation or merger or the specific terms imposed by law.

(3) The trustees of the board shall not engage in any activities which might result in a conflict of interest with their functions as fiduciaries for the association.

(4) The trustees of the board, the executive director, the deputy executive directors, and any employee of the association who is in a fiduciary position shall be subject to and shall make financial disclosures pursuant to the provisions of section 24-6-202.

(5) Any person who is in a fiduciary position with the association and who is adjudicated of violating any provisions of this article shall be personally liable to pay to the association an amount equal to any losses resulting from such violation and shall be subject to such equitable or remedial relief as the court deems appropriate. The court may enjoin any act or practice which violates any provision of this article.

Source: L. 87: Entire article R&RE, p. 1049, § 1, effective July 1. L. 95: (2) amended, p. 557, § 17, effective May 22. L. 2009: (2)(c) added, (SB 09-282), ch. 288, p. 1335, § 6, effective May 21.

Editor's note: This section is similar to former § 24-51-107 as it existed prior to 1987.

ANNOTATION

Trustees' fiduciary duty to deal impartially with its beneficiaries outweighs its duty of loyalty to any particular member, where plaintiff unsuccessfully argued that PERA's fiduciary duties to its members prevented it from performing quasi-judicial functions in determining a member's eligibility for disability benefits. Tepley v. Pub. Emp. Retirement Ass'n, 955 P.2d 573 (Colo. App. 1997).

The board's response to a co-trustee's request for information is subject to either the statutory duty of loyalty or the common law duty of loyalty to the beneficiaries of the trust. Therefore, the board may unilaterally place conditions on its compliance with a co-trustee's request for information and refuse to provide the information requested unless and until those conditions are satisfied if such actions comport with the trustees' applicable duty of loyalty. Stapleton v. Pub. Employees Ret. Ass'n, 2013 COA 116, 412 P.3d 572.

The fact that the court may be the ultimate arbiter of an alleged breach of a fiduciary duty does not preclude a board from placing reasonable conditions on, or even reasonably refusing, a co-trustee's request for information if the board determines that such conditions or refusal comports with the board's own fiduciary duties. Stapleton v. Pub. Employees Ret. Ass'n, 2013 COA 116, 412 P.3d 572.