Great post. From what I read, Federal Law already restricts the defined benefit pension plan, the old style pension, to hold no more than 10% of the pension plans assets in the company's stock. I am not a big fan of gov't regulation but there should be a similiar restriction for 401k plans too.
The whole point of allowing employees to direct their own investments is to allow each employee to invest according to his/her age, risk tolerance, etc. In a poole plan, such as a profit sharing plan, the trustees must invest according to the least common risk, since they are fiduciaries for the entire plan. Younger aprticpants thus feel the plan is too conservative and push for personal control.
Additionally, trustees are not held personally liable for the performance of individual accounts; only that the plan give enough options to allow participants to be properly diversified, and the particpants be given enough education to make ann informed decision.
In most cases the underwriters of the investment options provide the education to the emp-loyees through open meetings, newsletters and inserts in paychecks.
Again, 99% of the fault in the 401k Plan losses MUST be that of the individual particpant - that is the law and the consequences!!!!!