Defendants in a lawsuit accusing Fidelity Investments and its parent company of self-dealing in its 401(k) plan have agreed to pay $28.5 million to settle the case.
In addition, the defendants agree that, on a prospective basis beginning no later than 30 days after the effective date of the settlement , one or more plan fiduciaries will undertake monitoring plan recordkeeping fees and the plan’s investment options, other than any investments available through the plan’s self-directed brokerage account.
According to the settlement agreement, it is entered into “solely for the purpose of avoiding possible future expenses, burdens or distractions of litigation,” and all defendants deny any wrongdoing.
The lawsuit accused plan fiduciaries of using the plan as an opportunity to promote Fidelity’s mutual fund business at the expense of the plan and participants. According to the complaint, the defendants loaded the plan exclusively with Fidelity-affiliated investments, without investigating whether plan participants would have been better served by investments managed by unaffiliated companies.The lawsuit alleges that the defendants knew their conduct was unlawful because they previously settled a similar lawsuit. In 2014, Fidelity Investments agreed to pay $12 million, in addition to providing non-monetary relief, to settle two lawsuits charging it with subjecting its own 401(k) plan participants to high investment fees.
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