Severstal Wheeling, Inc. Retirement Committee v. WPN Corp. (119 F. Supp. 3d 240, 2015)

Opinion and Order

LAURA TAYLOR SWAIN, District Judge.

Plaintiffs, who are the current members of the Severstal Wheeling, Inc. Retirement Committee (the “Severstal Retirement Committee”) bring this action in their representative capacity, together with the Severstal Plans (defined below), against Defendants WPN Corporation (“WPN”) and Ronald LaBow, who is WPN’s principal and sole executive officer (“LaBow” and, together with WPN, “Defendants”). Defendants served at all relevant times as the investment’advisors and/or managers of two defined contribution plans sponsored by Severstal Wheeliñg Inc. (“SWI”) and' its predecessors, the "Wheeling Corrugating Company Retirement Security' Plan and the Salaried Employees Pension Plan of Severstal Wheeling (together the “Sev-erstal Plans”). Plaintiffs assert that Defendants failed to prudently and loyally manage and diversify the Severstal Plans’ assets and advise the Plans’ fiduciaries, and that Defendants breached their contract with the Severstal Plans by failing to obtain fiduciary insurance covering claims for breach of fiduciary duty, under .the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1001 et seq.

The Court has jurisdiction of this action pursuant to 28 U.S.C. § 1331.

The Court held a bench trial from July 8, 2014 through July 22, 2014, observing each witness carefully, and has reviewed thoroughly the evidence presented and the pre and post trial submissions of the parties.

This Opinion and Order constitutes the Court’s findings of fact and conclusions of law pursuant to Rule 52(a) of the Federal Rules of Civil Procedure. To the extent a finding of fact includes a conclusion of law, it is deemed a conclusion of law, and vice versa.

For the following reasons, the Court finds that Defendants breached their fiduciary duties to the Severstal Plans in violation of ERISA and are liable for the full amount of the Plans’ resulting investment losses, as well as for disgorgement of the fees that they received during the relevant period under WPN’s investment management agreement with the Severstal Plans.

I.

Findings op Fact

The following findings of fact are based on the trial record, which includes the parties’ stipulation of certain facts. Unless otherwise indicated, Plaintiffs have proven the facts set forth below by a preponderance of the credible evidence.

This litigation arises from the transfer of certain employee benefit plan assets from a pooled employee benefit plan trust maintained by SWTs former affiliate WHX (the “Combined Trust”) to a separate trust for three SWT-sponsored plans (the “Sev-erstal Trust”), and the failure to diversify, for a period of time, the Severstal Plans’ assets transferred to the new trust. Prior to the transfer, the assets of the Severstal Plans constituted approximately 10 percent of the assets in the Combined Trust. (Stip. ¶ 19.) The Severstal Plans are defined contribution plans regulated by ERISA. (Stip. ¶ 1.) The Plans are “employee pension benefit plants]” within the meaning of 29 U.S.C. Section 1002(2)(A). The Severstal Plans’ documents provide that the Severstal Retirement Committee, whose members are appointed by SWI, are the “Named Fiduciaries” of the Plans and the Plan Administrator of the Plans. At the time of trial, Plaintiffs Richard Caruso, William Drew Landon, and Timothy Rogers comprised the Severstal Retirement Committee. (Stip. ¶2.) Plaintiffs’ predecessor committee members include Michael DiClemente, Dennis Halpin, and Vince Assetta. Defendant WPN, acting through its principal LaBow, served as Investment Manager to the Combined Trust, and as Investment Manager to the Severstal Trust. LaBow is the former non-executive Chairman of WHX and was President of one of WHX’s predecessor companies through at least 2009. He founded WPN in 1987. WPN registered with the Securities & Exchange Commission as an investment advisor in March 2008 under the Investment Advisors Act of 1940. (Stip. ¶ 1.)

Defendants’ Role as Investment Manager of the Combined Trust

WPN entered into the WHX Corporation Investment Consulting Agreement with WHX (the “WHX Investment Agreement”) after LaBow stepped down as chairman of WHX in 2004. (See id.; Stip. ¶ 21; Joint'Ex. 1.)

The WHX Pension Investment Committee was responsible for overseeing the activities of WPN and LaBow in investing and managing the Combined Trust. (Trial Tr. (Kassan) at 804:6-10; id. (McCabe) at 1197:24-1198:3.) The WHX Pension Administration Committee .was responsible for ordering transfers of funds and disbursements of benefits from the Combined Trust. (Id. (Kassan) at 804:20-22.) After the separation of SWT’s predecessor from WHX in 2003, the assets of the Wheeling Corrugating Plan and the Salaried Employees Plan continued to be held in the Combined Trust. (Stip. ¶ 17.)

The WHX Investment Agreement “authorize[d] and directed]” WPN “to exercise complete, - unlimited and unrestricted management authority with respect to” the assets in the Combined Trust, including the assets of the Severstal Plans. (Joint Ex. 1, ¶ 7.) The Agreement specifically gave WPN the authority: “(a) To invest and reinvest the [Combined Trust] at such time and in such- manner as [WPN] in the complete and unlimited exercise of its discretion shall determine; (b) To purchase and sell securities for the [Combined Trust] in the name of [WHX], for the account of [WHX] and at the sole risk of [WHX]; (c) To arrange for the delivery of and payment for any such investments, including securities, bought and sold for the account of [WHX Corporation]; (d) In effecting any such investments, reinvestments, purchases and sales, to use and obtain the assistance and services of such brokers, dealers, investment bankers, underwriters and other firms, enterprises and services as [WPN] in its discretion shall designate' or seleet[.]” (Joint Ex. 1 f7(a)-(d).) In practice, Defendants advised the WHX Retirement Plan Committee on Combined Trust investments, and on investment managers with whom to invest Combined Trust assets, and those decisions were then implemented by individuals employed by WHX. (Trial Tr. (LaBow) 210:19-24; id. (Riposo) at 132:14-20, 135:17-20; id. (Kassan) 804:625, 807:25-808:6; id. (DiClemente) at 548:5-10; 777:16-21; id. (King) at 1089:23-1090:8; Pis. Exs. 66, 70.) There is no evidence of any investment decision taken for the Combined Trust at any time relevant to this litigation that was not the product of a recommendation by LaBow, WPN, or both. LaBow communicated periodically with the Severstal Retirement Committee prior to the creation of the separate Severstal Trust, but all investment decisions for the Combined Trust were made and/or implemented by the WHX Pension Investment Committee or other agents of WHX on the basis of La-Bow’s recommendations through WPN.

In March 2008, the WHX Pension Investment Committee commissioned an analysis by Aon Investment Consulting (“Aon”) of whether WPN’s fees and responsibilities should be changed. (Trial Tr. (Kassan) at 812:3-12.) Aon recommended that WHX approve WPN’s request to increase its fees from the 50 basis points provided for by the WHX Investment Consulting Agreement to 90 basis points. (Pis. Ex. 1 at 1-2.) Aon also recommended that WHX “review and if necessary amend the Investment Policy Statement” for the WHX Pension Plans “to provide for the delegation of investment authority to WPN and remov[e] the requirement of final Committee approval for investment selection, and to provide for the ongoing oversight responsibilities of the Committee.” (Pis. Ex. 1 at 2.)

LaBow and WHX executed a Second Amendment to the WHX Investment Agreement (the “Second Amendment”) to be effective August 1, 2008, (stip. ¶23; Joint Ex. 3), which incorporated the changes to LaBow’s investment management agreement that had been recommended by the Aon report, (see Trial Tr. (Kassan) at 817:11-26.) WPN’s title was changed from Investment Consultant, to Investment Manager of the Combined Trust. (Joint Ex. 3 ¶ 1.) In modified paragraph 3(m), WPN represented that “La-Bow has the primary responsibility for performing the services of the Manager with respect to” the Combined Trust. In modified paragraph 3(e), WPN represented that it was registered with the SEC under the Investment Advisors Act of 1940. {Id. ¶ 2.) A new paragraph 7 recited that WPN was empowered to select and designate other investment managers to manage the Combined Trust, and that WPN was a “Named Fiduciary” for these purposes. {Id. ¶ 5.) Paragraph 10 of the Second Amendment modified Exhibit A of the WHX Investment Agreement to provide WPN with increased fees for its services as Investment Manager, rather than as a mere Investment Consultant. As modified, Exhibit A provided that WPN would be paid a fee of 90 basis points per year on the value of the Combined Trust. {Id. ¶ 10.) Paragraph 11 of the Second Amendment provided that, “as amended,” the WHX Investment Agreement would continue in full force and effect. {Id. ¶ 11.) Paragraph 11 incorporated paragraph 7 of the original WHX Investment Agreement in its entirety, including its provisions that “authorized] and directed] [WPN] to exercise complete, unlimited, and unrestricted management authority with respect to the investment of’ the assets contained in the Combined Trust. (Id. ¶ 11; Joint Ex. 1 ¶ 7(d).) WPN continued to have power to retain broker-dealers to make transactions in Trust assets. (Joint Ex. 1 ¶ 6; Joint Ex. 3 ¶ 11.)

At all relevant times through late 2008, Citibank was the custodial trustee of the Combined Trust pursuant to the Wheeling-Pittsburgh Steel Corporation Pension Plan Trust agreement, dated December 23, 2003. (Joint Ex. 5.)

The terms of the WHX’s Trust Agreement with Citibank required Citibank, as Trust Custodian, to follow the directions of a designated Investment Manager. (Id. § 4.2(a) (“The Trustee shall follow the directions of an Investment Manager regarding the investment and reinvestment of the Trust Fund____”).) The terms of the Citibank Trust Agreement also required Citibank to notify the WHX Pension Committee and to convert the assets held at Citibank into cash equivalents if the Committee did not properly notify them of the Investment Manager or other fiduciary with authority to direct investments. (Id. § 4.2 (“In the event the Pension Investment Committee shall fail to specify pursuant to this Section 4.2 the person or persons who are to manage the investment of the Trust or any portion thereof, the Trustee shall promptly give notice of this fact to the Pension Investment Committee and shall invest the Trust or such portion solely in short term obligations____”).) The Trust Agreement also authorized Citibank to accept trade directions issued by an investment manager to a broker. (Id. § 4.2(a) (“[T]he Trustee, upon direction by the Investment Manager, shall execute and deliver the appropriate trading authorizations” for trades ordered through a broker by the Manager).)

Notwithstanding the provisions of the amended WHX Investment Agreement and the foregoing provisions of the WHX Trust Agreement, Defendants did not direct Citibank to make investments of the Combined Trust assets, and Citibank was never specifically notified of such authority. WHX Treasurer David Riposo and WHX Pension Investment Committee members Glen Kassan and James McCabe each testified that WPN made investment recommendations for the combined WHX Trust, but had no authority to make investment decisions. They each testified credibly that the WHX Pension Investment .Committee made all investment decisions, and it is clear that their understanding was that Defendants only had authority to render investment advice to the Committee. (Trial Tr. (Riposo) 132:14-20; id. (McCabe) 1210:22-1212:4; id. (Kassan)1306:16-1307:4.) There is no evidence, however, that WPN’s advice was ever rejected, or that LaBow' expected that his advice would not be followed. SWI and Severstal Retirement Committee were never put in a position to make investment decisions for the Combined Trust.

Citibank’s Plan to Exit the Trust Business; Need for Separation of Severstal Plan Assets from Combined Trust

By June 2008, Citibank had decided to exit the trust business. (Stip: ¶ 24.) By no later than June 18, 2008, WPN, LaBow and WHX had learned that Citibank intended to withdraw as trustee of the Combined Trust ■ and that the assets of the Severstal Plans had to be transferred to a new and separate trust and placed with a new trustee. (Pis. Ex. -3; Joint Ex. 11; Trial Tr. (Riposo) at 75:9-14.) WHX and LaBow told Michael DiClemente, member of the Severstal Retirement Committee, on or about June 18, 2008, that the Trust assets would need to be separated. (See Joint Ex. 11; Trial Tr. (DiClemente) at 420:17-20.) By letter dated June 18, 2008, WHX informed DiClemente that the . trust separation would occur on September 30, 2008. (Joint Ex. 11.)

LaBow Agrees .to Continue Serving as Severstal Plans’ Investment Manager After Trust Separation

During the summer of 2008, LaBow initiated discussions with DiClemente about continuing to function as the Severstal Plans’ investment manager after the trust separation. (Trial Tr. (DiClemente) at 421:3-21.) LaBow and DiClemente agreed, prior to November 3, 2008, that WPN would continue acting as the Severs-tal Plans’ investment' manager after the trust separation:

Q: And you had indicated that you were willing to do so, correct?

A: Yes, I did.

Q: You had conversations where both of.you — you, had indicated to him you were interested in continuing the investment manager and. he had indicated to you that he was interested in having you continue [as] investment manager prior to November 3,2008?

. A: Yes.

(Id. (LaBow) at 264:2-10, 265:23-266:3.)

LaBow told Riposo to send DiClemente copies of the First and Second Amendments and the WHX Investment Consulting Agreement. (See id. (LaBow) at 186:25-187:5.) LaBow understood that the Severstal Retirement Committee would modify the Second Amendment to create a separate management contract regarding the Severstal Plans. (Id. at 265:14-19.) DiClemente.also understood that the WHX agreements would be used to create an investment management agreement with the Severstal Retirement Committee. (Id. at 430:14-20.) In mid-October 2008, the Severstal Retirement Committee’s attorney, Sally King, began converting the Second Amendment into a Third Amendment, to create an investment management agreement between WPN and the Severs-tal Retirement Committee (the “Severstal Investment Management Agreement”). (Id. (King) at 1088:24-1089:4.) King adapted the Second Amendment in order to have an agreement drafted as quickly as possible due to the upcoming trust separation. (Id. at 1089:9-13.) She finished her initial draft of. the Severstal Investment Management Agreement around October 22, 2008. (Id. at 1089:5-6.)

Each of the Severstal Plans empowered the Severstal Retirement Committee and its members, as Named Fiduciaries of the plans, to appoint one or more Investment Managers as defined in ERISA Section 3(38) to manage the Plan’s funds, providing that “[u]pon the acceptance by the Investment Manager of the fiduciary duty incident to such appointment, such investment manager shall be solely liable for all investment actions taken concerning the assets of [the] Plan which are subject to his management.” (Joint Ex. 6 §§ 8.010, 8.110; Joint Ex. 7 §§ 9.1, 9.11.)

LaBow signed the Severstal Investment Management Agreement on behalf of WPN on December 5, 2008, dating the agreement as of November 1, 2008. (Stip. ¶26; Joint Ex. 4.) On or shortly before December 5, 2008, DiClemente signed the Severstal Investment Management Agreement on behalf of SWI and the Severstal Plans and as a member of the Severstal Retirement Committee. (Joint Ex. 4; Pis. Ex. 29.) The Severstal Investment Management Agreement was substantially identical to the Second Amendment, except that it defined. Defendants’ duties with respect to the newly separated Severstal Trust rather than the Combined Trust. (Compare Joint Ex. Nos. 3 and 4.) LaBow handwrote onto the Severstal Investment Management Agreement an effective date of November 1, 2008, two days prior to the date on which the Severstal Plan assets had been transferred to the Severstal Trust. LaBow acknowledged that the Severstal Investment Management Agreement made him a fiduciary for the Severs-tal Trust. (Trial Tr. (LaBow) at 370:12-14.)

Both the Second Amendment and the Severstal Investment Management Agreement incorporated paragraph 7 of the original WHX Corporation Investment Consulting Agreement, which provided that, subject to the Client’s timely communicated investment policies and the standards, imposed by Section 404(a) of ERISA, 29 U.S.C. § 1104(a), WPN was to exercise complete, unlimited and unrestricted management authority with respect to the investment of the Investment Fund, including having the authority:

(a) To invest and reinvest the Investment Fund at such time and in such manner as [WPN] in the complete and unlimited exercise of its discretion shall determine;

(b) To purchase and sell securities for the Investment Fund in the name of the Client for the account of the Client and at the sole risk of the Client;

(c) To arrange for the delivery of and payment for any such investments, including securities, bought and sold for the account of the Client;

(d) In effecting any such investments ... to use and obtain the assistance and services of such brokers, dealers ... and other ... services as [WPN] in its discretion shall designate or select.

(Joint Ex. 1 at 3; see Joint Ex. 2 at 4; Joint Ex. -4 at 4.) Under both the Second Amendment and the Severstal Investment Management Agreement, WPN represented and warranted that it was a registered investment advisor under the Investment Advisors Act of 1940 and that it “ha[d] the primary responsibility for performing the services of [WPN] with respect to the Investment Fund.” (Joint Ex. 3 at 3; Joint Ex. 4 at 2-3.) WPN further represented and warranted in the Second Amendment that all of its management actions under the agreement “shall be in accordance with ERISA.” (Joint Ex. 3 at 4.) In the Sev-erstal Investment Management Agreement, WPN represented and warranted that “all actions taken by [WPN] under this Agreement shall be in accordance with ERISA” and that WPN “acknowledge^] that it is a fiduciary acting within the scope of section 3(38) of ERISA.” (Joint Ex. 4 at 4.) Both the Second Amendment and the Severstal Investment Management Agreement further provided that WPN would be paid an annual fee of .90 percent of the value of the Investment Fund (i.e., 90 basis points) for its services. (Joint Ex. 3 at 8; Joint Ex. 4 at 7.)

Planning for Asset Transfer to Severstal Trust

In an email dated September 15, 2008, WHX Treasurer David Riposo informed LaBow that DiClemente had requested that assets be transferred from the Combined Trust to the new trust for the Sev-erstal Plans.in cash. .(Pis. Ex. 17.) La-Bow responded in an email on the same day, stating that “[Severstal] may not get cash. We shall see.” (Pis. Ex. 18.) On September 30, 2008, DiClemente and WHX CEO and Pension Investment Committee Member, Glen Kassan signed an agreement to transfer the Severstal Plan assets “in the same percentage allocations as existed in the WHX Pension Trust ... on or about September 30, 2008.” (Pis. Ex. 28.) Although LaBow did not sign that agreement, he understood that DiCle-mente and Kassan had reached an agreement as of September 30, 2008, that the Severstal Plans would receive a proportional allocation of the Combined Trust portfolio and had received a copy of the agreement. (Trial Tr. (LaBow) 223 — 11—ál; Pis. Ex. 31.) LaBow also understood that, if Severstal and WHX agreed to something, he would have to adhere to that agreement. (Id. at 224:20-22.) At all times thereafter prior to the transfer of assets, which ultimately occurred on November 3, 2008, rather than September 30, 2008, and into December 2008, the Severs-tal Retirement Committee believed that the new trust would receive a proportional allocation, or a “slice,” of the Combined Trust portfolio. (Trial Tr. (DiClemente) at 424:21-425:12, 434:19-435:11.)

LaBow testified at trial that Defendants discovered prior to November 3, 2008, that it was not possible for the new Severstal Trust to receive a “slice” of each Combined Trust investment account. Some of the Combined Trust’s investment vehicles had liquidity restrictions, which Defendants surmised would have hampered the ability of the Severstal Trust to pay benefits. These investments typically required that an investor give notice in writing of an intended withdrawal “ninety days or sixty days before the end of their fiscal year,” and the investor would be cashed out only after the end of year audit was completed. These investment vehicles also required sixty to ninety days advance notice before the end of a quarter for a partial liquidation. (Id. (LaBow) 343:11-347:1, 1039:3-22.) LaBow also asserted at' trial that other Combined Trust investments could not be transferred to the Severstal Trust because they had minimum capital requirements that the Severstal Trust could not meet. (Id. (LaBow) 343:25-344:18.) Defendants proffered no written corroboration or other support for these assertions, nor did LaBow explain why the requisite advance notice could not have been given. In addition, LaBow’s assertions regarding minimum capital requirements were called into question by other trial testimony. (See, e.g., Trial Tr. (Por-ten) 1342:22-1343:4, 1344:19-24, 1437:4-6, 1438:14-17.)

LaBow testified that, after Defendants determined that a “slice” was impossible, they advised the Severstal Retirement Committee and WHX Pension Investment Committee that the Combined Trust should transfer assets that had no minimum capital requirements and that could be liquidated right away. (See id. (La-Bow) 348:10-24.)

No transfer was made on September 30, 2008, the date WHX had previously announced as the transfer date. In an email dated October 3, 2008 — three days after the previously announced transfer date— Riposo asked LaBow, “have you identified the assets to move to [Severstal]? Anything WHX needs to sign?” (Pis. Ex. 29.) LaBow replied via email on the same day that he was “working on it.” (Pis. Ex. 31.) LaBow emailed WHX Pension Investment Committee Chairman and CEO Glen Kas-san on October 6, 2008, regarding the trust separation, stating that LaBow had “a suggestion about transfer and also a problem — need to speak with you tomorrow— where should I call?” (Pis. Ex. 33; Trial Tr. (Kassan) at 821:9-12,21-23.)

By letter dated October 22, 2008, LaBow told DiClemente that the transfer had not occurred on September 30, 2008. (Pis. Ex. 47.) Although his letter identified “market volatility” as the reason that the transfer did not occur on September 30, 2008, La-Bow did not actually believe that market volatility was the reason why the transfer did not occur on September 30, 2008. (Trial Tr. (LaBow) at 225-7:10.) He did not explain the true cause of the delay. In the October 22, 2008 letter, LaBow told DiClemente: “On November 3, 2008, I intend to direct the transfer of most of the assets of the plans to the [Severstal] Trust.” (Pis. Ex. 47.) Although LaBow did not sign this letter, he approved the content of the letter and directed his secretary to put it on WPN letterhead and send it on his behalf. (Trial Tr. (LaBow) at 226:15-19; 240:9-16.) At the time he received the October 22, 2008, letter from LaBow, DiClemente understood that the assets that would be transferred would be SWTs proportional share of the Combined Trust investments. (Trial Tr. (DiCle-mente) 428:21-25, 429: 1-13.) LaBow had not indicated otherwise to DiClemente. (Id.)

As of October 31, 2008, the Combined Trust contained a portfolio of twenty-one separate accounts. The portfolio included an account managed by Neuberger Ber-man, LLC, composed of thirteen large-capitalization equity securities, eleven of which were energy-sector stocks, comprising approximately 97 percent of the value of assets in the account (the “Neuberger Berman Account”). (Stip. ¶ 30; Joint Ex. 10.) The Combined Trust also contained a contribution/distribution account that consisted of funds used to make monthly' pension payments and in which cash was héld for future reinvestment if other funds in the Trust were liquidated. (Trial Tr. (Ri-poso) at 73:8-18.) The assets of the Sev-erstal Plans constituted approximately ten percent of the assets of the Combined Trust and the remaining ninety percent of the assets in the Combined Trust constituted assets of benefit or retirement plans sponsored or maintained by WHX or its subsidiaries (the “WHX Plans”) (Id.) The expenses and the investment gains of the Combined Trust were shared ratably among the Severstal Plans and WHX Plans- across the entire asset base of the Combined ■ Trust. (Id. at 68:11-15; id. (Kronenberg) at 1219:24-1220:1.) The Severstal Plans owned a percentage interest in each investment held in the Combined Trust. (Id. (Kronenberg) at 1219:19-23,1227:10-13.)

The November 8, 2008, Asset Transfer

On October 31, 2008, LaBow emailed WHX Treasurer David Riposo and instructed him to “transfer the entire [Neu-berger . Berman Account] to Severstal Wheeling prior to market opening on November 3, 2008.” (Joint Ex. 13.) Riposo forwarded that email to James McCabe, then a Vice President of WHX and a member of the WHX Pension Administration Committee and Glen Kassan, WHX CEO and Pension Investment Committee Member. (Pis. Ex. 61.) Kassan responded to LaBow that he “would like to discuss this” over the weekend. (Id.) LaBow responded that “the world is very difficult right now and I would appreciate leaving this alone unless there is a violation of ERISA.” (Id.) Kassan .then responded, “Lam .not suggesting we change anything. As a member of the Investment Committee I would simply like to understand why you have changed the process from the last one you discussed with me and how it will affect our pension plan.” (Id.) LaBow replied, “I will call you tomorrow.” (Id.) LaBow could not recall whether he in fact called Kassan that" weekend. (Trial Tr. (LaBow) 245:5-12.)

Upon the November 3, 2008, written instructions of McCabe, Citibank transferred the entire contents of the Neuber-ger Berman Account — an undiversified portfolio principally comprised of large-cap energy stocks — to the new Severstal Trust on that date. The Severstal Trust funds were held by Citibank at that time. Citibank carried out the transfer instruction on Monday, November 3, 2008, and the transaction settled on that date. (Stip. ¶33.) Neither the Severstal Retirement Committee nor any other representative of SWI gave Citibank-instructions regarding the transfer on or before November 3, 2008.

LaBow. had advised WHX. to .transfer the Neuberger Berman Account, instead of cash or a diversified group of investments, to‘the Severstal Trust. Although LaBow could have had the Neuberger Berman account liquidated prior to the transfer, so that ‘ the Severstal Trust would- receive cash, he did not do so. LaBow testified that he did not know why he did not recommend that the transfer occur in cash, but asserted that he believed the transferred assets were the equivalent of cash. (Trial Tr. (LaBow) 361:24-362:4.) Neither LaBow, nor anyone from WHX'or Citibank, informed any SWI representative that the Severstal Plans’ trust would be receiving the whole of the Neuberger Ber-man Account and nothing else, nor did any of those parties inform SWI of the asset composition of the Neuberger Berman Account.

On November 4, 2008, Nancy Kronen-berg, Citibank’s Trust Administrator for Master Trust and Custody, requested that DiClemente send her a letter to accept the transfer that had occurred oh November 3. (See Joint Ex. 15; Trial Tr. (Kronenberg) at 1232:2-7.) DiClemente sent a letter to Kronenberg which specified that the transfer of Neuberger Berman assets should occur “[a]s part of transferring the assets of’ the Severstal Plans “from the WHX Corporation trust to SWTs existing trust at Citibank.” (Joint Ex. 5.) DiClemente testified credibly that he did not understand that the Neuberger Berman Account assets were the only assets being transferred to the Severstal Trust. Rather, he thought that Severstal Plans were receiving a proportion of each of the assets held in the WHX Combined Trust.

As of October 31, 2008, the Severstal Plan assets were worth $38,147,879.49. (Joint Ex. 18.) At that time, the market value of the Neuberger Berman Account was $31,446,845.38. (Id.) After the November 3‘, 2008, transfer, the Severstal Plans’ interest in the Combined Trust was treated as limited to the excess of the Severstal Plans’ October 31, 2008, total asset value over the October 31, 2008, market value of the’ 'Neuberger Berman Account assets. The only investments held in the Severstal Trust from November 3, 2008, until March 24, 2009, were the undiversified Neuberger Berman Account assets.

LaBow testified that he understood that, as of November 3, 2008, he did not have the ability to liquidate the securities in the Neuberger Bermán Account that had been transferred to the Severstal Trust and he was aware that SWI did not have an account management agreement with Neu-berger Berman, so Neuberger Berman also lacked the ability to liquidate those securities on the Severstal Plans’ behalf as of that date. (Trial Tr. (LaBow) 261:18-262:21.)

Citibank did not require the Combined Trust assets to be separated until the end of 2008; LaBow thus could have waited until a manager or management plan was put in place before directing the transfer of assets that would have to be liquidated and reinvested to achieve a diversified portfolio. (See id. (Porten) at 1331:3-19; id. (DiClemente) at 428:8-20.) Defendants did not put a plan of management in place for the transferred assets, did not liquidate or reinvest those assets, and did not inform the Severstal Retirement Committee of the need for immediate attention to the management of those assets. Notwithstanding the fact that the Severstal Plans’ assets were part of the Combined Trust and his prior agreement to continue to manage Severstal Plan investments following, the creation of the Severstal Trust, LaBow did not acknowledge at trial that he had any professional or legal obligation to the Severstal Plans during the decision making process that led up to the transfer of assets to the new Severstal Trust. La-Bow admitted that he had not thought about the fact that he was transferring assets that belonged to the Severstal Plans. (Trial Tr. (LaBow) at 1051:6-11.) He claims that he did not understand that he had any responsibility for assets belonging to the Severstal Plans on October 31, 2008. (Id. at 1051:20-23.) Rather, LaBow testified, he “felt that he was an employee-that [he] had an arrangement with the WHX trust only.” (Id. at 1051:23-24.)

The Severstal Retirement Committee Discovers that Plan Assets Are Not Managed or Diversified

Sometime in late-November 2008, Sev-erstal Retirement Committee attorney Sally King reviewed an investment management agreement with Neuberger Berman that LaBow was recommending the Committee sign. (See Trial Tr. (King) at 1080:6-8, 1142:10-17.) King concluded that it would not be prudent for the Sev-erstal Retirement Committee to sign the agreement because the Severstal Plans would then be paying duplicative fees to Neuberger Berman, as LaBow was already obliged to provide the investment management services under the Severstal Investment Management Agreement. (See id. (DiClemente) at 442:15-443:3; id. (King) at 1080:9-1081:4,1083:20-24.)

DiClemente learned for the first time on December 12, 2008, that Neuberger Ber-man was not continuing to manage any portion of the Severstal Plans’ assets. (Defs. Ex. G; Trial Tr. (DiClemente) at 598:9-12.) LaBow had not told DiCle-mente that the Severstal Plans’ assets were not being managed , before. (Trial Tr. (DiClemente) at 775:24-776:4.) Although there is evidence that LaBow suggested to DiClemente. that SWI should retain Neuberger Berman as manager of the account, the Court finds credible DiClemente’s testimony that he and the Sev-erstal Retirement Committee believed that Defendants had investment management responsibility and authority over the assets. The Court does not credit LaBow’s suggestion that he clearly informed DiCle-mente or any other representative of the Severstal Retirement Committee that Defendants were not managing the assets or that there were any serious impediments to Defendants’ active management of the transferred assets.

On or about December 18, 2008, LaBow tried to open an account for the Severstal Trust assets at Neuberger Berman. La-Bow testified that Neuberger Berman refused to accept his signature to open an investment management account for the Severstal Trust. He testified that he and WPN could not open a brokerage account for the Severstal Trust anywhere else because he did not have authority over the funds. (Trial Tr. (LaBow) 367:23-368:15, 371:11-15; Pis. Ex. 78.) LaBow recommended that the Severstal Retirement Committee enter a management agreement with Neuberger Berman to manage the Severstal Plans’ funds. He took no steps to manage the .assets through WPN, despite the authorization provisions of the Second Amendment, which were carried over into the Severstal Investment Management Agreement, .nor did.he recommend that SWI open >a brokerage account for the Severstal Trust to facilitate the

operation of transactions directed by WPN.

On December 30, 2008, King and DiCle-mente instructed LaBow to renegotiate the fees with Neuberger Berman before the Severstal Retirement Committee signed a management agreement. (Joint Ex. 16.) LaBow testified that he attempted to negotiate reduced fees with Neuber-ger Berman by calling portfolio manager Marvin Schwartz once, on December 30, 2008, and that Schwartz told LaBow that the fees could not be reduced because doing would have an adverse ripple effect due to “Most Favored Nations” pricing clauses in Neuberger Berman’s investment management agreements with other clients. (Trial Tr. (LaBow) at 1032:3-15.) LaBow also testified that he did not know whether he discussed Neuberger Berman’s fees with SWI after December 30, 2008. (Id. (LaBow) at 1034:10-12.) Schwartz denied that he had discussed fees with La-Bow regarding any account for SWI after the Combined Trust separation. (See id. (Schwartz) at 1253:19-1254:16; 1254:23-1255:2.)

National City Bank became the custodial trustee of the Severstal Plans as of January 2, 2009. (Pis. Ex. 212; Stip. ¶ 28; Trial Tr. (DiClemente) at 463:6-18.) Jacqueline Thomas and Amanda Pierce, each a representative of National City Bank, received copies of the Severstal Investment Management Agreement from the Severstal Retirement Committee. (Id.) Thomas and Pierce each acknowledged in deposition testimony read into the record at trial that the Severstal Investment Management Agreement and other documentation received from SWI by National City gave National City sufficient information regarding WPN’s authority as Investment Manager to enable National City to accept trade directions from LaBow or WPN. (Deposition of Amanda Pierce

(“Pierce Dep.”) at 25:6-25:19, 30:1-30:14, 53:10-53:15, 60:1-60:23, 63:198-64:15,

104:2-104:22, 108:6-15, 108:14-25, 109:2-18, 110:2-7; Deposition of Jacqueline Thomas (“Thomas Dep.”) at 15:22-16:2, 22:23-23:3, 23:21-24:24, 25:9-26:6, 26:13-26:18, 27:7-15.)

The credible evidence demonstrates that LaBow had investment authority to direct National City Bank to conduct transactions for the Severstal Plans. SWI’s Trust Agreement with National City Bank explicitly required National City to follow the instructions of an investment manager. LaBow had been appointed as investment manager under the Severstal Investment Management Agreement. (Joint Ex. 7 ¶ 9.11; Joint Ex. 5 § 4.2(a); Joint Ex. 6 ¶ 8.110.) LaBow claimed at trial that representatives of National City Bank refused to speak with him regarding the Severstal Plans because they did not know him. Pierce testified, however, that she recognized LaBow as the investment manager of the' Severstal Plans and that he was authorized to give trade directions to National City Bank. (Kg., Pierce Dep. at 25:6-19; 53:10-15, 63:9-64:15.) Pierce further testified that she contacted LaBow to get “information to set him up as a broker, investment manager for the account.” (Pierce Dep. at 49:22-24.) Thomas also testified that she understood LaBow was the Severstal Plans’ investment manager and had authority to direct the investment of the Plans’ assets. (K.g., Thomas Dep. 15:22-16:2, 23:21-24:24, 25:9-26:6.)

The Severstal Retirement Committee Discovers that the Plans’ Assets are Undiver-sified

On December 29, 2008, DiClemente received a report from Mercer Investment Consultants (“Mercer”), an investment consultant to the Severstal Retirement Committee that performed periodic portfolio reviews. (See Pis. Ex. 82.) At that point, DiClemente learned for the first time, from Mercer rather than from La-Bow, that the Neuberger Berman Account assets were the only assets that LaBow had transferred to the Severstal Plans’ trust. (Id.; Trial Tr. (DiClemente) at 447:12-20.) DiClemente called Severstal Retirement Committee member Dennis Halpin to inform him of what DiClemente had learned. (Trial Tr. (DiClemente) at 448:4-15.)

Prior to December 29, 2008, neither La-Bow nor WHX had informed DiClemente, Halpin, or King that the Severstal Plans’ trust had received only the Neuberger Berman Account assets, or of the composition of the transferred assets. (Id. (DiCle-mente) at 779:19-22; id. (Riposo) at 118:8-11; id. (Halpin) at 835:7-15; id. (King) at 1081:17-21.) As Mercer ordinarily provided the Severstal Retirement Committee with its quarterly investment performance reports between sixty and ninety days after the end of each quarter, the Committee would not have received a report for the fourth quarter of 2008 until about March 2009. (Id. (DiClemente) at 494:19-25.) As of mid-December 2008, Severstal Retirement Committee attorney King had understood that part of the trust separation had been accomplished' and that some of the assets transferred were being managed by Neuberger Berman. (Id. (King) at 1130:18-23.) The Severstal Retirement Committee had asked LaBow to provide statements of what assets were in the Sev-erstal Plans’ trust accounts in December 2008. (Id. (King) at 1130:24-1131:1.) However, King and the Severstal Retirement Committee did not receive .copies of any statements from LaBow or anyone else before December 30, 2008. (See id. (King) at 1131:2-10.)

On December 30, 2008, DiClemente and King held a conference call with LaBow. (Joint Ex. 16; Pis. Ex. 82; Trial Tr. (DiClemente) at 632:6-8;) The main topic of the call was the Severstal Retirement Committee’s discovery that LaBow had transferred only the Neuberger Berman Account assets to the Severstal Plans. (Trial Tr. (King) at 1090:15-21.) The Committee expressed its concern that the assets transferred were entirely equity securities in the same volatile market sector and were not diversified. (Id. (King) at 1090:25-1091:3.) The Committee also expressed its belief that maintenance of the bhlk of the Plans’ assets in a single asset type violated the Severstal Plans’ investment policy, which was the same as the policy governing the Combined Trust, and which, the Severstal Retirement Committee had adopted as an interim measure before a new Severstal Plans’ policy could be adopted. (Id. (King) at 1091:3-7.) In response, LaBow told the Committee that he had transferred only the Neuberger Berman Account assets because they were stocks that he could watch and liquidate easily. (Id. (King) at 1091:8-11.) On the December 30, 2008, call, LaBow also told DiClemente and King that he could reallocate proportionally the - assets of the Sev-erstal Trust and the Combined Trust on a retroactive basis, by redistributing assets between the two trusts in proportion to their holdings while the Trusts were combined. (Pis. Ex. -91; Trial Tr. (DiCle-mente) at 452:15-16; 634:25-635:4; 636:9-16; 681:11-14.)

The Severstal Retirement Committee Attempts to Reallocate or “Reset” the Portfolio

The Severstal' Retirement Committee held a conference call with LaBow on January 7, 2009, with' DiClemente and Halpin as Committee members and outside Committee counsel King present. (Pis. Ex. 91.) The Committee’s purpose in undertaking the call was to discuss diversification of the Severstal Plans’ assets, either by reallocating assets between the Severs-tal and WHX Trusts to recreate the portfolio that existed as of October 31, 2008, or implementing an alternative method of diversifying the Plans’ holdings as soon as possible. (Trial Tr. (King) at 1096:9-16.) LaBow admitted on the January 7, 2009, call that -he was the one who had chosen which assets to transfer to the Severstal Plans. (Id. (DiClemente) at 462:20-23; see Pis. Ex. 91 at 2 (noting LaBow admitted that “he chose to'allocate the assets”).) LaBow did not express surprise that the Committee was alarmed by the allocation of the Neuberger ,, Berman Account, nor did he-claim that DiClemente or any other Severstal Retirement Committee member had agreed to receive only the Neuberger Berman Account assets before the transfer. (Trial Tr. (DiClemente) at 462:24-463:5.) LaBow also identified several reasons, including concerns about the, liquidity of the assets to be transferred and withdrawal limitations on certain funds held in the Combined Trust, as to why he could not reapportion or reset all of the funds in the .Combined and Severstal Trusts to return the Severstal Trust to the same composition of assets it held before the November 3, 2008 transfer. (Id. (DiClemente) at 460:21-461:31.)

During that call, the Severstal Retirement Committee asked LaBow to diversify by any means available if a “reset” to the October 31, 2008, portfolio allocation was not feasible. (See Trial Tr. (King) at 1096:20-1097:9.) The Committee explicitly instructed LaBow to diversify the Severs-tal Plans’ holdings by any means feasible and to “construct a more balanced diversified portfolio and ... do everything he can to preserve value in making the transition from the Neuberger Berman (NB) portfolio.” (Pis. Ex. 91.)

The Committee held another conference call with LaBow on January 16, 2009, in which the Committee again requested that LaBow reset the portfolio retroactively in conjunction with the Combined Trust holdings to the extent feasible and, to the extent such a reset could not be achieved, provide a plan for reinvesting the portfolio in a manner consistent with the Combined Trust to diversify the investments of the Severstal Plans. (See Pis. Ex. 103; Trial Tr. (DiClemente). at -472:23-473:14.) On that call, LaBow identified four funds in the Combined Trust that he said the Sev-erstal Plans could not invest in, but thereafter identified six funds that he said the Severstal Plans could invest in. (Pis. Ex. 103 at 2.) Although LaBow had previously told the Committee that the Severstal Plans could be reset to reallocate assets retroactively in conjunction with the Combined Trust, he now told the Committee that he did not think it could be done, and was not sure if it was legal to do so. (Pis. Ex. 103.) The Severstal Retirement Committee requested that LaBow create a writing identifying the investment funds that were in the Combined Trust into which the Severstal Plans could invest, and LaBow agreed. (Id.) Finally, the Severs-tal Retirement Committee “emphatically” told LaBow that it “did not want Ron [LaBow] to take any action prior to providing the [Severstal Retirement Committee] with his formal [retroactive re]allocation plan, specifically stating ‘don’t act until you show us the allocation.’ ” (Trial Tr. (La-Bow) 1012:25-1013:9; Pis. Ex. 103.)

DiClemente testified credibly that La-Bow’s account of whether and how the Severstal Plans could be diversified was “an ever evolving story of what could or could not be done” that “seemed to change just about during every conversation” with the Severstal Retirement Committee. (Id. (DiClemente) at 474:5-7.) As DiClemente commented, it was “almost as if [LaBow] was doing his homework after the fact as opposed to having it done before.” (Id. (DiClemente) at 474:7-9.) During the January 16, 2009, call, LaBow informed the Retirement Committee that, after he had chosen investments, the Retirement Committee “would not have an opportunity to assess [the investments] and ask him to redo it once it’s completed.” (Pis. Ex. 103 at 2.) .In response; DiClemente, on behalf of the Committee, told LaBow that-he needed to provide the Committee with a formal allocation plan for reinvesting in a diversified portfolio. (Id.) DiClemente noted that he believed that LaBow continued to have “responsibility once he determined what he wanted to do. We just wanted to know what he wanted to do.” (Trial Tr. (DiCle-mente) at 764:3-4.) Halpin testified credibly that “everything we. did, including this, was consistent with that [LaBow] had, the authority exclusively.” (Id (Halpin) at 851:7-18.)

As of January 2009, the Committee was attempting to impose greater oversight on LaBow’s actions because LaBow had previously allocated only the Neuberger Berman Account to the Severstal Plans without telling them what he was ‘doing. (Id (DiClemente) at 764:5 — 11; id. (Halpin) at 914:15-20.) By referring to a formal allocation plan, the Severstal Retirement Committee was asking for specific details of the proposed investments “that would give [the Severstal Retirement Committee] comfort” about the “diversification” of the assets. (Id (Halpin) at 852:3-5.) DiClemente understood that the investment funds discussed during the January 16, 2009, call were precisely the same funds that were originally held in the Combined Trust. (Id (DiClemente) at 481:23-482:2.) LaBow testified that he -had referred to funds that were somewhat different than those in the Combined Trust. (Id (La-Bow) at 327:21-23; 330:20-23.) LaBow did not, however, at any time explain to DiClemente the difference in the funds. (Id (DiClemente) at 482:3-5.)

At the time of the January 16, 2009, call, LaBow had not told the Retirement Committee that a complete retroactive reallocation of assets between the WHX and Severstal Plans would be impossible. (Id. (DiClemente) at 770:14-16.) In a January 20, 2009, letter, the Severstal Retirement Committee requested that LaBow provide a written plan to reinvest the Severstal Trust. (Pis. Ex. 101.) The letter requested that LaBow “(a) identify in writing those accounts that cannot or should not be proportionally allocated” between the Severstal Plans and the WHX Plans, “(b) provide the reason[s] for such treatment, and (c) indicate how you are recommending equitable allocation of those assets among the remaining (or substitute) investments.” (Id.) DiClemente sent the letter, to LaBow in order to get LaBow to put in writing which funds could' and could not be reallocated between the WHX Plans and the Severstal Plans, and to identify álternative funds that could be used instead of the ones that were not available; (See Trial Tr. (DiClemente) at 483:24-484:5.) By “substitute”^investments, the Committee was referring to investments that would constitute a diversified investment portfolio,' but that had not been part of the Combined- Trust before the November 3 transfer. ' (Id. (DiClemente) at 477:915.) The Committee hoped LaBow would provide a plan to diversify the Sev-erstal Plans’ assets, whether using the same or different investments as had existed in the Combined Trust before November 3, 2008. (See id. (DiClementé) at 666:25-667:1.) At no time, however, did LaBow provide the written plan the Committee requested in its January 20,' 2009, letter. (Id. (LaBow) at 294:21-24.)

The Severstal Retirement Committee held a further conference call with LaBow on January-26, 2009. (Pis. Ex. 112.) During this call, LaBow-told the Committee that investment vehicles he had identified during the January 16, 2009, call as ones that could be used to reinvest the Severs-tal Plans’ trust holdings could not be used. (Pis. Ex. 112.) It appears that LaBow had earlier referred to funds that were managed by the same entities but that held a different composition of assets. In response, the Committee reiterated its request that LaBow diversify the Severstal Plans’ trust “in a manner keeping the fund profile intact with regard to diversity of managers and investments.” (Id.) The Committee also restated its request from January 16, 2009, that LaBow put in writing which investment funds could and could not be in the Severstal Plans’ new portfolio, and LaBow again agreed to do so. (Id.)

LaBow had not provided any plan for reinvesting the assets of the Severstal Plans’ trust by February 4, 2009. (Trial Tr. (DiClemente) at 772:11-15.) LaBow sent a February 4, 2009, letter to the Severstal Retirement Committee, listing four funds in which the Severstal Plans might invest, but it was not the investment plan that the Committee had requested because it lacked any specificity with regard to diversification and composition percentages. (See id. (Halpin) at 853:2-9; id. (King) at 1100:11-16, 1103:3-5; id. (Porten) at 1255:10-1356:9.) In the February 4, 2009, letter, LaBow acknowledged that he had made the decision to transfer the Neuberger Berman assets, asserting that “I felt I had no other option given market conditions and the previous decline in energy shares [but] to transfer the Neu-berger Berman account....” (Joint Ex. 19.) LaBow also stated that he would convert most of the Neuberger Berman Account to cash and invest it in four funds. (Id.) LaBow provided the Severstal Retirement Committee with no information about the composition of the proposed funds, whether they would constituted a diversified portfolio, the percentage of the Plans’ assets that would be invested in each, or when and how LaBow would execute the strategy. The Committee was not requesting Investment Plan information because LaBow needed formal approval from the Committee to act, but because the Committee simply “wanted to understand the overall investment strategy” and ensure that the Severstal Plans received a diversified portfolio, unlike the Neuberger Berman assets. (Id. (DiClemente) at 685:17-18, 685:6-12, 740:24-741:4; id. (Halpin) at 854:22-25.) Even if the Sev-erstal Retirement Committee approved LaBow’s proposed allocation of the Severs-tal Plans’ funds, the Committee could not have acted on LaBow’s proposal to invest in the four funds without receiving more information about them and whether, taken together, they constituted a diversified portfolio. (See id. (DiClemente) at 486:6-12; 684:5-684:18.)

The Committee held another conference call with LaBow on February 11, 2009. (Pis. Ex. 122.) During the call, LaBow identified two additional funds that had been in the Combined Trust — “Sage” and “Procyon” — that he now claimed were unavailable to the Severstal Plans, despite having previously told the Committee that they were available options. (Compare Pls. Ex. 122 at 1 (Feb. 11 call representing Sage and Procyon unavailable) with Pis. Ex. 103 at 2 (Jan. 16 call representing Sage and Procyon available); Trial Tr. (DiClemente) at 488:22-489:10.) LaBow’s statements about which assets the Severstal Plans could invest in on the February 11, 2009, call and other calls with the Severstal Retirement Committee were inconsistent with each other. (See Pis. Ex. 122 (“Ron’s inability to [invest the Plans’ assets] continues to change .... from ‘being able to do it at the outset’ to essentially not having any ability to do it.”); Trial Tr. (DiClemente) at 771:23-25; id. (Halpin) at 854:11-14 (“On each of the calls there seemed to be a different answer each day. There were pieces of a puzzle that [La-Bow] would have a difficult time actually putting together.”).)

LaBow’s inability to accomplish any retroactive reallocation of the assets between the Severstal Trust and the Combined Trust did not become fully apparent until February 17, 2009, when WHX CEO Glen Kassan informed the Severstal Retirement Committee that WHX would not accept the return of a proportional share of the Neuberger Berman Account. (Pls. Ex. 129; Trial Tr. (Halpin) at 845:23-846:4; id. (DiClemente) at 774:7-15; id. (King) at 1106:13-16.)

Despite LaBow’s failure to negotiate a fee reduction, on February 25, 2009, Hal-pin signed the Neuberger Berman investment management agreement “in an effort to move the situation forward.” (Joint Ex. 20 at 2.) DiClemente e-mailed a copy of the signed investment management agreement to Neuberger Berman along with the Severstal Investment Management Agreement, but noted that Halpin had not completed the portion of the investment management agreement regarding Neuberger Berman’s fee because DiClemente thought that “LaBow may have discussed or will discuss with [Neuberger Berman] the fees for the account.” (Pis. Ex. 136; Trial Tr. (DiClemente) at 506:5-16.)

LaBow’s Disingenuous Claims of Inability to Act

LaBow asserted at trial that he was not able to liquidate, or otherwise manage, the Neuberger Berman Account assets during the relevant period absent the Severstal Retirement Committee’s execution of an investment management agreement with Neuberger Berman, and that the failure to enter into such an agreement and effect a liquidation during the Winter of 2008 to 2009 was the result of the Committee’s inaction. The Court finds LaBow’s attempt to shift blafne to the Severstal Retirement Committee disingenuous, because the Committee was awaiting a coherent response from him on the issue of elimination of duplicative management fees from the proposed agreement, as King had highlighted in December 2008, and LaBow did not explore other simpler means of facilitating liquidation and reinvestment such' as the establishment of a basic brokerage account or bank trading link.

.Although LaBow testified that, prior to March 24,2009, the lack of a “trading link” rendered him unable to manage the assets, LaBow himself did nothing to facilitate opening a “trading link” with National City Bank. (Trial Tr. (DiClemente) at 775:9-11.) Moreover, LaBow never asked the Severs-tal Retirement Committee to provide WPN with a “trading link” account connected to National City Bank. (Id. (DiCle-mente) at 756:14-16.) There is no reason that LaBow could not have established a trading link before March 24, 2009. (Id. (DiClemente) at 775:16-18.) Moreover, LaBow never told Halpin that the Committee had to do anything specific to give LáBow authority to sell the Neuberger Berman Account assets after Halpin had signed the investment management agreement with Neuberger Berman. (Id. (Halpin) at 863:24-864:2.)

LaBow admitted at trial that it was not necessary to use Neuberger Berman as a broker to liquidate the Neuberger Berman Account assets, and that any broker could have been used. (Trial Tr. (LaBow) at 315:22-316:5.) Furthermore, each witness from National City Bank testified that the bank recognized LaBow’s authority and would have accepted investment directions given by him. (Pierce Dep. at 25:6-25:19, 30:1-30:14, 53:10-53:15, . 63:198-64:15, 104:2-104:22; Thomas Dep. at 15:22-16:2, 22:23-23:3, 23:21-24:24, 26:13-26:18.) National City’s Trust Agreement with SWI authorized National City to carry out any directions from LaBow. (Joint Ex. 5 § 4.2(a); see also Trial Tr. (Porten) at 1431:21-25.)

LaBow’s testimony that he spoke to. an unspecified person at Neuberger Berman on March 24, 2009, who told him that he could not give the instruction to liquidate the Severstal Plans’ assets and that Dennis Halpin had to give that instruction is not credible. (See Trial Tr. (LaBow) at 1001:20-1002:6.) Marvin Schwartz, LaBow’s friend and longtime business associate, testified that LaBow gave the instruction. (Id. (Schwartz) at 1258:18-20.) Schwartz understood in March 2009 that LaBow had the authority to manage and liquidate the assets in the Severstal Plans’ trust. (Id. (Schwartz) at 1259:1-3.) The Court credits Halpin’s testimony that he did not give the instruction. (Id. (Halpin) at 868:9-12.) It is undisputed that. the assets were liquidated on March 24, 2009, and there is no contention- that anyone other than LaBow or Halpin gave the instruction. LaBow left telephone messages for both King and Halpin on March 23-the day before the assets were liquidated— stating that he would shortly be liquidating the assets and acknowledging that he had sole responsibility for the investments. (See Pis. Exs. 145, 154.) Halpin testified that he did not remember any confirmation call from Neuberger Berman. The preponderance of the credible evidence proves that LaBow gave the instruction to liquidate the Severstal Plans’ Neuberger Berman Account assets on March 24, 2009, and that he understood at all relevant times that he had sole investment authority and responsibility for the Severstal Trust assets.

Despite LaBow’s assertions that he lacked authority to complete the trade of the Neuberger Berman Account assets, the Court credits Schwartz’s testimony that, on March 24, 2009, LaBow instructed Neuberger Berman to sell the assets and the Neuberger Berman Account assets were finally converted them to cash and cash equivalents, (See Stip. ¶39; Pis. Exs. 145, 154; Trial "Tr. (Schwartz) at 1275:20-22,1277:1-9.) No member or representative of the Severstal Retirement Committee instructed LaBow or Neuberger Berman to sell the assets on March 24, 2009. (Trial Tr. (LaBow) at 1056:6-7.)

A Prudent Investment Manager Would Have Taken Proactive Steps to Overcome Logistical Obstacles

Plaintiffs established, through the credible testimony of their fiduciary expert, Charles Porten, that a prudent fiduciary would have raised clearly with the other named fiduciaries any impediments arising from a perceived lack of authority that a custodian of Severstal Plan assets had asserted. Pórten testified that, even if La-Bow’s authority was not recognized by a bank or other service provider,' an investment advisor would normally test authority and, if a trustee failed to recognize that authority, LaBow “should have gone back to Severstal and said that, I’m responsible to achieve diversification. You’re' not letting me do it for these reasons. Now, either you want me to achieve diversification, which is my responsibility, or you don’t. If you do, then do the necessary. If you don’t, find someone else.” (Id. (Porten) 1353:2-14.)

At trial, LaBow attempted to justify his inattention to his investment advisory authority and responsibilities by claiming that he could not have formulated an investment plan because the Severstal Retirement Committee had not provided him with an investment policy. This testimony is counter-factual. King testified credibly that the Severstal Retirement Committee had adopted the pre-existing WHX policy, under which Defendants had been operating in connection with the Combined Trust, as an interim measure and had at a minimum implicitly communicated this to LaBow when they instructed him to replicate the WHX portfolio if he could not arrange a retroactive reallocation. (Trial Tr. (King) at 1091:3-7). Furthermore, King and Plaintiffs’ fiduciary expert,-Por-ten, both testified credibly that cjiversified portfolios can be constructed in the absence of formal investment policies. As Porten testified, investment managers are able to provide investment plans even in the absence of a formal investment policy. (Id. (Porten) at 1358:1-7.) King, who has advised over 50 ERISA-covered pension plans as an ERISA practitioner and provided advice on their investment policies from an ERISA compliance standpoint, testified that investment managers th