A preliminary settlement agreement has been submitted for court approval in a case accusing American Airlines of including affiliated funds in its retirement plan investment lineup though they were more expensive and lower-performing than other funds.
The core of the plaintiffs’ claims relate to the use of American Beacon Funds in the plan. AMR Corp., American Airlines’ parent company, created a line of mutual funds that were managed by another subsidiary of AMR Corp. This fund manager was later renamed American Beacon Advisors, Inc. in 2005. Earlier this year, a federal district court judge refused to dismiss the case.
The gross settlement amount is $22 million, of which $12 million will be contributed by the American Airlines defendants or their agents or insurers and $10 million will be contributed by American Beacon or its agents or insurers.
According to the settlement agreement “the Settling Parties, as defined below, have concluded that it is desirable that this matter be finally settled upon the terms and conditions set forth in this Settlement Agreement.” American Airlines and American Beacon deny any wrongdoing or liability with respect to any of the allegations or claims.