Barrick Gold Faces Lawsuit About 401(k) Investment Selections

An Employee Retirement Income Security Act (ERISA) lawsuit has been filed against Barrick Gold of North America and other fiduciaries of its defined contribution (DC) retirement plans.

The complaint notes that at the end of 2017 and 2018, the plan had more than $619 million and $560 million, respectively, in assets under management (AUM), qualifying it as a large plan in the DC plan marketplace. As such, it argues, the plan had substantial bargaining power regarding the fees and expenses that were charged against participants’ investments. The lawsuit alleges the defendants did not try to reduce the plan’s expenses or exercise appropriate judgment to scrutinize each investment option that was offered in the plan to ensure it was prudent.

The plaintiffs allege that during the class period, the defendants, as fiduciaries of the plan, breached their ERISA duties by failing to objectively and adequately review the plan’s investment portfolio to ensure that each investment option was prudent in terms of cost and by maintaining certain funds in the plan despite the availability of identical or similar investment options with lower costs and/or better performance histories.

In addition, the lawsuit alleges that the defendants failed to utilize the lowest cost share class for many of the mutual funds within the plan and failed to consider collective trusts, commingled accounts or separate accounts as alternatives to the mutual funds in the plan, despite their lower fees.

Specific allegations in the complaint are nearly identical to those posed in a similar lawsuit recently filed against the Pharmaceutical Product Development (PPD) Retirement Savings Plan. The law firm Capozzi Adler represents plaintiffs in both lawsuits.

As in the PPD lawsuit, the current complaint notes that the funds in the plan have stayed relatively unchanged since 2014. The complaint includes a chart of comparisons as of 2018 that plaintiffs say shows funds in the plan were much more expensive than comparable funds found in similarly sized plans. The plaintiffs also say prudent retirement plan fiduciaries will search for and select the lowest-priced share class available, but allege that in several instances during the class period, the defendants failed to prudently monitor the plan to determine whether it was invested in the lowest-cost share class available for the plan’s mutual funds.

In addition to failing to investigate the availability of lower-cost collective trusts or separate accounts, the complaint says plan fiduciaries failed to use lower-cost passively and actively managed funds in the plan’s investment menu.

The lawsuit also includes a claim that the defendants failed to monitor or control the plan’s recordkeeping expenses.