PER CURIAM

Daniel W. Krasner (Matthew M. Guiney, Wolf Haldenstein Adler Freeman & Herz LLP, New York, NY; Thomas J. McKenna, Gregory Egleston, Gainey McKenna & Egleston, New York, NY, on the brief), Wolf Haldenstein Adler Freeman & Herz LLP, New York, NY, for Plaintiffs–Appellants Alex E. Rinehart, on behalf of himself and all others similarly situated, Jo Anne Buzzo, Monique Miller Fong, on behalf of herself and others similarly situated, Maria DeSousa, and Linda DeMizio.

Jonathan K. Youngwood (Janet Gochman, Alexander Li, on the brief), Simpson Thacher & Bartlett LLP, New York, NY, for Defendants–Appellees Mary Pat Archer, Amitabh Arora, Michael Branca, Evelyne Estey, Adam Feinstein, David Romhilt, and Wendy M. Uvino.

Todd S. Fishman, Allen & Overy LLP, New York, NY, for Defendant–Appellee Richard S. Fuld, Jr.

Opinion

PER CURIAM:

This case returns to the Court for the second time since 2013. After the September 2008 bankruptcy of Lehman Brothers Holdings, Inc. (“Lehman”), Plaintiffs–Appellants (“Plaintiffs”) brought suit on behalf of a putative class of former participants in an employee stock ownership plan (“ESOP”) invested exclusively in Lehman's common stock. Plaintiffs alleged that Defendants–Appellees (“Plan Committee Defendants” or “Benefit Committee Defendants”), who were fiduciaries of this ESOP, breached their duty of prudence under the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. §§ 1001 et seq., by continuing to permit investment in Lehman stock in the face of circumstances arguably foreshadowing its eventual demise. Plaintiffs also alleged that Lehman's former directors, including Lehman's former chairman and chief executive officer, Defendant–Appellee Richard S. Fuld (“Defendant Fuld”), violated ERISA by failing to keep the Plan Committee Defendants apprised of material, nonpublic information that could have affected their evaluation of the prudence of investing in Lehman stock. Applying the presumption of prudence articulated in Moench v. Robertson, 62 F.3d 553 (3d Cir.1995), and adopted by this Court in In re Citigroup ERISA Litigation, 662 F.3d 128 (2d Cir.2011), the United States District Court for the Southern District of New York (Kaplan, Judge ) dismissed Plaintiffs' consolidated amended complaint (“CAC”) and second consolidated amended complaint (“SCAC”) for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6). On July 15, 2013, we affirmed the District Court's dismissal of both the CAC and SCAC while also applying the Moench presumption, concluding that Plaintiffs had failed to “plausibly allege[ ] that the Benefit Committee Defendants knew or should have known that Lehman was an imprudent investment given the mixed signals with which the fiduciaries grappled.” Rinehart v. Akers, 722 F.3d 137, 151 (2d Cir.2013).

Nearly a year later, on June 25, 2014, the Supreme Court of the United States held in Fifth Third Bancorp v. Dudenhoeffer that ESOP fiduciaries are not entitled to any special presumption of prudence. ––– U.S. ––––, 134 S.Ct. 2459, 2463, 189 L.Ed.2d 457 (2014). On July 1, 2014, the Supreme Court granted Plaintiffs' petition for a writ of certiorari, vacated the judgment in Rinehart, and remanded the case to our Court for further consideration in light of Fifth Third. Rinehart v. Akers, ––– U.S. ––––, 134 S.Ct. 2900, 189 L.Ed.2d 853 (2014). We, in turn, remanded the case to the District Court, and the District Court allowed Plaintiffs to replace the SCAC with a third consolidated amended complaint (“TCAC”) that narrowed their claims and shortened the class period.

On July 10, 2015, the District Court dismissed the TCAC, again holding that Plaintiffs had failed to state a claim under Rule 12(b)(6). In re Lehman Bros. Sec. & ERISA Litig., 113 F.Supp.3d 745, 769 (S.D.N.Y.2015). Though recognizing that Fifth Third abrogated the Moench presumption of prudence formerly governing ESOP-based ERISA claims in this Circuit, the District Court nonetheless concluded that Plaintiffs failed to allege sufficiently that the Plan Committee Defendants violated their ERISA fiduciary duties as measured by the Twombly and Iqbal pleading standards. Id. at 754–55.

We affirm.

DISCUSSION

The central purpose of ERISA is “to protect beneficiaries of employee benefit plans.” Slupinski v. First Unum Life Ins. Co., 554 F.3d 38, 47 (2d Cir.2009). To further this purpose, ERISA imposes on fiduciaries a duty to “act in a prudent manner ‘under the circumstances then prevailing.’ ” Pension Benefit Guar. Corp. ex rel. St. Vincent Catholic Med. Ctrs. Ret. Plan v. Morgan Stanley Inv. Mgmt., Inc., 712 F.3d 705, 716 (2d Cir.2013) (quoting 29 U.S.C. § 1104(a)(1)(B)). We have long measured this duty “according to the objective prudent person standard developed in the common law of trusts,” Katsaros v. Cody, 744 F.2d 270, 279 (2d Cir.1984) (internal quotation marks omitted), and have emphasized that ERISA's “fiduciary duty of care ... requires prudence, not prescience,” Pension Benefit Guar. Corp., 712 F.3d at 716 (alteration in original) (internal quotation marks omitted).

In Fifth Third, the Supreme Court rejected the presumption that we previously applied when analyzing the prudence of an ESOP fiduciary's decision to buy or hold an employer's stock. 134 S.Ct. at 2463. Prior to Fifth Third, we held that “an ESOP fiduciary who invests the [ESOP's] assets in employer stock is entitled to a presumption that it acted consistently with ERISA” in doing so. Moench v. Robertson, 62 F.3d 553, 571 (3d Cir.1995); see also In re Citigroup ERISA Litig., 662 F.3d 128, 138 (2d Cir.2011) (adopting the Moench presumption in the Second Circuit because “it provides the best accommodation between the competing ERISA values of protecting retirement assets and encouraging investment in employer stock”). Fifth Third, however, held unequivocally that “the law does not create a special presumption favoring ESOP fiduciaries.” Fifth Third, 134 S.Ct. at 2467. Instead, “the same standard of prudence applies to all ERISA fiduciaries, including ESOP fiduciaries, except that an ESOP fiduciary is under no duty to diversify the ESOP's holdings.” Id.

Despite rejecting any special presumption of prudence for ESOP fiduciaries, Fifth Third made clear that “where a stock is publicly traded, allegations that a fiduciary should have recognized from publicly available information alone that the market was over- or undervaluing the stock are implausible as a general rule, at least in the absence of special circumstances.” Id. at 2471. The Court emphasized that ERISA fiduciaries, who “could reasonably see ‘little hope of outperforming the market ... based solely on their analysis of publicly available information’ may, as a general matter, ... prudently rely on the market price.” Id. (first alteration in original) (quoting Halliburton Co. v. Erica P. John Fund, Inc., –––U.S. ––––, 134 S.Ct. 2398, 2411, 189 L.Ed.2d 339 (2014)). The Court specifically declined to consider “whether a plaintiff could nonetheless plausibly allege imprudence on the basis of publicly available information by pointing to a special circumstance affecting the reliability of the market price as ‘an unbiased assessment of the security's value in light of all public information’ that would make reliance on the market's valuation imprudent.” Id. at 2472 (quoting Halliburton, 134 S.Ct. at 2411).

For claims alleging breach of the duty of prudence on the basis of nonpublic information, Fifth Third held that “a plaintiff must plausibly allege an alternative action that the defendant could have taken that would have been consistent with the securities laws and that a prudent fiduciary in the same circumstances would not have viewed as more likely to harm the fund than to help it.” Id. The Court identified three considerations pertinent to this analysis:

[1] [C]ourts must bear in mind that the duty of prudence, under ERISA as under the common law of trusts, does not require a fiduciary to break the law....

[2] [C]ourts should consider the extent to which an ERISA-based obligation either to refrain on the basis of inside information from making a planned trade or to disclose inside information to the public could conflict with the complex insider trading and corporate disclosure requirements imposed by the federal securities laws or with the objectives of those laws....

[3] [C]ourts ... should also consider whether the complaint has plausibly alleged that a prudent fiduciary in the defendant's position could not have concluded that stopping purchases—which

the market might take as a sign that insider fiduciaries viewed the employer's stock as a bad investment—or publicly disclosing negative information would do more harm than good to the fund by causing a drop in the stock price and a concomitant drop in the value of the stock already held by the fund.

Id. at 2472–73.

It did not take long for a post-Fifth Third case to reach the High Court. Harris v. Amgen, Inc. was a class action brought by participants in an employee benefit plan alleging breaches of fiduciary duties under ERISA when the trustees of the Plan allowed continued investment in the employer's stock despite allegedly knowing that its price was artificially inflated as a result of improper off-label drug marketing and sales. 788 F.3d 916 (9th Cir.2015), rev'd, ––– U.S. ––––, 136 S.Ct. 758, 193 L.Ed.2d 696 (2016) (per curiam). On remand from the Supreme Court, the Ninth Circuit reasoned that the plaintiffs' complaint adequately alleged claims under Fifth Third because, in light of the fact that “the federal securities laws require disclosure of material information,” it is “quite plausible ... that defendants could remove the [Amgen Common Stock Fund] from the list of investment options without causing undue harm to plan participants.” Id. at 937–38.

The Supreme Court accepted the possibility that “removing the Amgen Common Stock Fund from the list of investment options” might be “an alternative action that could plausibly have satisfied Fifth Third 's standards.” Amgen Inc., 136 S.Ct. at 760. Nevertheless, the Court reversed the Ninth Circuit because plaintiffs failed to plead “facts and allegations supporting that proposition.” Id. Though it faulted the Ninth Circuit for “fail[ing] to assess whether the complaint in its current form ‘has plausibly alleged’ that a prudent fiduciary in the same position ‘could not have concluded’ that the alternative action ‘would do more harm than good,’ ” the Court concluded ultimately that “the stockholders are the masters of their complaint” and the complaint did not contain “sufficient facts and allegations to state a claim for breach of the duty of prudence.” Id. (quoting Fifth Third, 134 S.Ct. at 2473).

Plaintiffs here allege in Count I of the TCAC that the Plan Committee Defendants knew or should have known, based on publicly available information, that investment in Lehman had become increasingly risky throughout 2008, and that failing to consider the wisdom of continuing to invest in Lehman during this period constituted a breach of fiduciary duty. See J.A. 684–88 (TCAC ¶¶ 412–26). The District Court found—and we agree—that neither Fifth Third nor the substitution of one amended complaint for another changes our previous conclusion that Plaintiffs have failed to plausibly allege a breach of duty claim. As the District Court observed, the TCAC's updated descriptions of “allegedly ominous news articles, volatility of Lehman's stock price, increased trading volumes, rising costs of Lehman credit default swaps and other investment instruments, downgrades from various ratings agencies, and criticism from investment analysts ... do no more than add marginally to the cacophony of ‘mixed signals' described in the SCAC.” In re Lehman Bros. Sec. & ERISA Litig., 113 F.Supp.3d at 755 (quoting Rinehart, 722 F.3d at 151). These additions and refinements “do not nudge the allegations of the TCAC across the plausibility threshold.” Id.

Plaintiffs attempt to plead around Fifth Third by saying that their claims concern “excessive risk” and therefore are not covered by Fifth Third, which Plaintiffs argue dealt only with claims concerning “market value.” For purposes of this analysis, we agree with the District Court that the purported distinction between claims involving “excessive risk” and claims involving “market value” is illusory. Fifth Third “foreclose[s] breach of prudence claims based on public information irrespective of whether such claims are characterized as based on alleged overvaluation or alleged riskiness of a stock.” In re Lehman Bros., 113 F.Supp.3d at 756 (emphasis added). Although the language of Fifth Third refers primarily to “over- or undervaluing” stock, the Fifth Third Court applied this rule to the plaintiffs' risk-based claims in that case. See 134 S.Ct. at 2471–72. Moreover, viewing this rule as applicable to all allegations of imprudence based upon public information—regardless of whether the allegations are framed in terms of market value or excessive risk—is consistent with the efficient market hypothesis that risk is accounted for in the market price of a security. See id.; see also Halliburton Co., 134 S.Ct. at 2411(“[I]t is reasonable to presume that most investors ... will rely on the security's market price as an unbiased assessment of the security's value in light of all public information.” (internal quotation marks omitted)).

Plaintiffs, picking up on the language of Fifth Third, assert that “special circumstances affect[ed] the reliability of the market price as an unbiased assessment of [Lehman's] value.” J.A. 688 (TCAC ¶ 429). See Fifth Third, 134 S.Ct. at 2472 (“We do not here consider whether a plaintiff could ... plausibly allege imprudence on the basis of publicly available information by pointing to a special circumstance affecting the reliability of the market price as ‘an unbiased assessment of the security's value in light of all public information, that would make their in light of all public information, that would make reliance on the market's valuation imprudent.’ ”). As support for their claim that “the market for Lehman stock faced unusual and extraordinary circumstances,” J.A. 659 (TCAC ¶ 315) (internal quotation marks omitted), Plaintiffs point to orders issued by the Securities and Exchange Commission (“SEC”) in July 2008 prohibiting the short-selling of securities of certain financial services firms, including Lehman. Plaintiffs allege in Count II that: (1) these SEC orders describe market conditions constituting “special circumstances;” and (2) the orders themselves created special circumstances by excluding naked short sales of certain securities, including Lehman.

Under their first theory, Plaintiffs claim that the Plan Committee Defendants “imprudently relied on the market's valuation of [Lehman] Stock during the Class Period,” J.A. 659 (TCAC ¶ 318), because the SEC's orders warned, among other things, that “there now exists a substantial threat of sudden and excessive fluctuations of securities prices generally and disruption in the functioning of the securities markets that could threaten fair and orderly markets.” U.S. Sec. & Exchange Comm'n, Emergency Order Pursuant to Section 12(k)(2) of the Securities Exchange Act of 1934 Taking Temporary Action to Respond to Market Developments at 2, Release No. 58166 (July 15, 2008), available at http://www.sec.gov/rules/other/2008/34–58166.pdf (hereinafter “July 15 Order”). But the SEC orders speak only conditionally about potential market effects resulting from so-called naked short sales; they do not purport to describe then-existing market conditions. Moreover, as the District Court observed, “the only plausible inference supported by the TCAC is that the market processed any risks identified in the SEC's orders as it would have processed any other public information about Lehman.” In re Lehman Bros., 113 F.Supp.3d 745, 759 (S.D.N.Y.2015). Plaintiffs therefore cannot establish “special circumstances” under this first theory.

As to their second theory, Plaintiffs' conclusory assertions do not give rise to a plausible inference that the SEC orders “affect[ed] the reliability of the market price as ‘an unbiased assessment of [Lehman's] value in light of all public information.’ ” Fifth Third, 134 S.Ct. at 2472. The TCAC parrots language from Fifth Third, but “we are not bound to accept as true a legal conclusion couched as a factual allegation.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). Given this defective pleading, we need not decide whether the July 2008 SEC orders constitute “special circumstances” within the meaning of Fifth Third.

The final two counts of the TCAC are alleged in the alternative. Count III alleges that the Plan Committee Defendants breached their fiduciary duties by failing to investigate nonpublic information regarding the risks of Lehman. See J.A. 689–94 (TCAC ¶¶ 433–47). Plaintiffs claim that had the Plan Committee Defendants honored their fiduciary obligation to conduct “an appropriate independent investigation” into the riskiness of Lehman stock during the class period, they would have uncovered nonpublic information revealing the imprudence of continuing to invest in that stock. J.A. 690–91 (TCAC ¶ 436). Count IV alleges that Defendant Fuld inadequately monitored the Plan Committee Defendants and breached his fiduciary duty by failing to share with those Defendants nonpublic information he possessed regarding the risks facing Lehman. See J.A. 694–97 (TCAC ¶ 448–59).

We agree with the District Court that Count III fails because “the TCAC nowhere explains in a non-conclusory fashion how plaintiffs' hypothetical investigation would have uncovered the alleged inside information.” In re Lehman Bros., 113 F.Supp.3d at 762. Even without the Moench presumption rejected by Fifth Third, it remains our standard that, to plead plausibly a breach of the duty of prudence for failure to investigate, “plaintiffs must allege facts that, if proved, would show that an ‘adequate investigation would have revealed to a reasonable fiduciary that the investment at issue was improvident.’ ” In re Citigroup ERISA Litig., 662 F.3d at 141 (quoting Kuper v. Iovenko, 66 F.3d 1447, 1460 (6th Cir.1995)). The TCAC in this case includes “no specific allegations about what lines of inquiry would have revealed this information or who, if pressed, in fact would have disclosed it to the Plan Committee Defendants.” In re Lehman Bros., 113 F.Supp.3d at 762.

Moreover, as the District Court recognized, see Lehman, 113 F.Supp.3d, at 763, the TCAC does not plausibly plead facts and allegations showing that a prudent fiduciary during the class period “would not have viewed [disclosure of material nonpublic information regarding Lehman or ceasing to buy Lehman stock] as more likely to harm the fund than to help it.” Amgen, 136 S.Ct. at 759 (2016) (quoting Fifth Third, 134 S.Ct. at 2472). Amgen reinforces this conclusion. A prudent fiduciary could have concluded that divesting Lehman stock, or simply holding it without purchasing more, “ ‘would do more harm than good.’ ” Amgen, 136 S.Ct. at 760 (quoting Fifth Third, 134 S.Ct. at 2473). Such an alternative action in the summer of 2008 could have had dire consequences. Like the Plaintiffs in Amgen, Plaintiffs here simply have not met the Fifth Third standard for making out “sufficient facts and allegations to state a claim for breach of the duty of prudence.” Id.

With regard to Defendant Fuld, the District Court correctly observed that nothing in Fifth Third changes our previous analysis dismissing Plaintiffs' duty to monitor and duty to inform claims. As we held previously, “Plaintiffs cannot maintain a claim for breach of the duty to monitor ... absent an underlying breach of the duties imposed under ERISA” by the Plan Committee Defendants. Rinehart, 722 F.3d at 154. Further, the District Court correctly concluded that “ERISA does not impose a duty on appointing fiduciaries to keep their appointees apprised of nonpublic information.” In re Lehman Bros., 113 F.Supp.3d at 765. Though this Court has not yet squarely addressed the issue, nothing in Fifth Third gives us reason to alter our previous view that, “even if we determined that Plaintiffs adequately alleged that the [Plan] Committee Defendants had violated their duty of prudence, we would be unlikely to conclude that the Director Defendants [including Defendant Fuld] had a duty to keep the plan managers apprised of material, nonpublic information regarding the soundness of Lehman as an investment.” Rinehart, 722 F.3d at 154.

CONCLUSION

We agree with the District Court that, even without the presumption of prudence rejected in Fifth Third, Plaintiffs have failed to plead plausibly that the Plan Committee Defendants breached their fiduciary duties under ERISA by failing to recognize the imminence of Lehman's collapse. We conclude now, as before, that Plaintiffs have not adequately shown that the Plan Committee Defendants should be held liable for their actions in attempting to meet their fiduciary duties under ERISA while simultaneously offering an undiversified investment option for employees' retirement savings. Accordingly, we AFFIRM the judgment of the District Court.