The Supreme Court’s Intel Case is About Secrecy, Fake Benchmarks, and Fiduciary Illusions

/ ChrisTobe

The retirement industry would like you to believe that the Supreme Court’s decision to hear Intel v. Cunningham is a narrow, technical dispute about whether “alternative investments” belong in 401(k) plans.

That is industry spin.

The Intel case is not about whether private equity is “good” or “bad.”
It is about whether ERISA fiduciaries can hide the governing investment contracts, invent benchmarks, and still claim compliance with the strictest fiduciary law in the country.

If Intel prevails, the consequences will not stop with private equity.
They will extend directly to target-date funds, annuities, private credit, and any opaque product that depends on secrecy to survive scrutiny.

The Industry Narrative: “Nothing to See Here”

Industry groups such as NAPA frame Intel as reassurance:

  • Private equity is just another asset class
  • Fiduciaries followed a prudent process
  • Plaintiffs are asking courts to micromanage investments
  • Disclosure of contracts is unnecessary

This framing is designed to shift the focus away from the core problem:

Intel will not disclose the private-equity contracts—nor even the names of the funds—while asking courts to assume those contracts are prudent, fairly priced, and conflict-free.

That is not how ERISA works.

The Real Issue: You Cannot Prove Prudence While Hiding the Contract

ERISA is not a “trust us” statute.

Under ERISA §404 and §406:

  • Fiduciaries must demonstrate prudence and loyalty
  • Transactions with parties in interest are presumptively prohibited
  • Fiduciaries—not participants—bear the burden of proving an exemption

As the Supreme Court made clear in Cunningham v. Cornell, once a prohibited transaction is plausibly alleged, the burden shifts to the fiduciary.

That burden cannot be met if the fiduciary refuses to disclose:

  • The investment contract
  • The fee and carry structure
  • The valuation methodology
  • The indemnification provisions
  • The conflicts and affiliate transactions

Secrecy is not neutral.
Secrecy defeats the exemption.

Private Equity in a 401(k) Is Not a “Fund” — It’s a Contract

This is where the industry misleads courts and fiduciaries.

Private equity is not a security with a market price.
It is a bespoke service contract governed by a limited partnership agreement.

That contract determines:

  • Who controls valuation (the manager)
  • How performance is measured (IRR and GP-asserted NAV)
  • How fees are extracted (management fees, transaction fees, carry)
  • How conflicts are resolved (usually in favor of the GP)

Without seeing the contract, there is no way to benchmark, monitor, or audit the investment.

That is not a technical quibble.
It is a fatal fiduciary defect.

The Intel Case Mirrors TIAA’s Target-Date “Risk Illusion”

If this sounds familiar, it should.

Intel’s strategy—hiding private-equity contracts while claiming prudence—is functionally identical to TIAA’s target-date fund strategy of hiding annuity contracts inside CITs and separate accounts.

In both cases:

  • The core economic engine is contractual, not market-based
  • The risks are masked by invented benchmarks
  • The valuation depends on manager discretion
  • The fiduciary claims “diversification” while avoiding disclosure

As I explained in TIAA’s Target Date Funds Are Built on a Risk Illusion, you cannot create real diversification—or real performance—by hiding contractual risk behind smoothed numbers.

Private equity in a 401(k) target-date fund is simply the next iteration of the same illusion.

TIAA’s Target Date Funds Are Built on a Risk Illusion – other firms copying

Fake Benchmarks Are the Common Thread

Intel’s defenders repeatedly argue that the plan used “appropriate benchmarks.”

But non-investable benchmarks are not benchmarks.

Private equity relies on:

  • Lagged, GP-asserted NAVs
  • IRRs that ignore cash-flow timing risk
  • Peer universes built from the same flawed data

This is no different from annuity providers benchmarking opaque general-account products against invented indices that no participant could ever invest in.

ERISA does not permit fiduciaries to benchmark themselves to their own homework.

Why the Supreme Court Took the Case

The Supreme Court did not take Intel because it wants to bless private equity in 401(k)s.

It took the case because the lower courts have allowed fiduciaries to use opacity as a litigation shield, undermining ERISA’s enforcement framework.

The question before the Court is simple:

Can an ERISA fiduciary satisfy its duties while hiding the governing investment contracts from participants and courts?

If the answer is yes, ERISA’s prohibited-transaction rules collapse—not just for private equity, but for:

  • Annuities
  • Private credit
  • Insurance separate accounts
  • Crypto-linked products
  • Any future opaque “innovation”

Bottom Line for Fiduciaries

This case is a warning.

If your investment strategy depends on:

  • Secret contracts
  • Invented benchmarks
  • Smoothed valuations
  • “Trust us” disclosures

you do not have an innovation problem.
You have a fiduciary problem.

The Supreme Court should—and likely will—make clear that ERISA does not permit secrecy as a substitute for prudence.

And when it does, the fallout will reach far beyond Intel.

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