ERISA Litigation Targets Insurance Services Office

The complaint, which includes stretches of text directly copied from previous lawsuits, says the plan sponsor’s actions were contrary to those of a reasonable fiduciary.

A new Employee Retirement Income Security Act (ERISA) lawsuit has been filed in the U.S. District Court for the District of New Jersey, naming Insurance Services Office Inc. (ISO) as the defendant, along with the company’s various retirement plan committees.

The suit includes much of the exact same text as the many others filed by the Capozzi Adler law firm, which has emerged recently as a leading filer of ERISA class action litigation. In this case, the firm is representing a proposed class of retirement plan participants who argue that ISO permitted the payment of excessive fees—due to the alleged lack of a prudent process for evaluating investment and administrative fees.

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“In many instances, defendants failed to utilize the lowest cost share class for many of the mutual funds within the plan, and failed to consider certain collective trusts available during the class period as alternatives to the mutual funds in the plan, despite their lower fees and materially similar investment objectives,” the complaint states. “Defendants’ mismanagement of the plan, to the detriment of participants and beneficiaries, constitutes a breach of the fiduciary duties of prudence and loyalty. Their actions were contrary to actions of a reasonable fiduciary and cost the plan and its participants millions of dollars.”

Using language repeated verbatim in many other Capozzi Adler lawsuits, the new complaint states that one indication of the defendants’ alleged failure to prudently monitor the plans’ funds is that the plans have retained several actively managed funds despite the fact that these funds charged “grossly excessive fees compared with comparable or superior alternatives.” The lawsuit also suggests that ISO has failed to use the lowest-cost share classes available to the plan.

“It is not prudent to select higher cost versions of the same fund even if a fiduciary believes fees charged to plan participants by the ‘retail’ class investment were the same as the fees charged by the ‘institutional’ class investment, net of the revenue sharing paid by the funds to defray the plan’s recordkeeping costs,” the complaint states, again using the exact same language as the other lawsuits. “Fiduciaries should not choose otherwise imprudent investments specifically to take advantage of revenue sharing.”

ISO declined to comment on the lawsuit, citing its policy not to discuss matters involving active litigation. The full text of the lawsuit is available here.