Gucci will pay $1.2 million to settle a lawsuit alleging the company and its benefits committee breached their fiduciary duties under the Employee Retirement Income Security Act (ERISA) by offering plan investments with excessive fees, among other things.
The defendants were accused of charging excessive administrative and investment fees to plan participants. In particular, the plaintiff claimed the defendants failed to “fully disclose to participants the expenses and risks of the Plan’s investment options; breached their fiduciary duties under ERISA by allowing unreasonable expenses to be charged to participants for administration of the Plan; and breached their fiduciary duties under ERISA by selecting and retaining opaque, high-cost, and poor-performing investments instead of other available and more prudent alternative investments.”
The complaint also stated that Gucci America was “particularly egregious” in regards to offering proprietary funds from its service provider Transamerica Retirement Solutions as investment options for participants.
Of the gross settlement amount, $395,000 will go to class counsel and $5,000 will go to the plaintiff as compensation for class representation, upon final approval of the court.
The settlement agreement says the defendants admit no wrongdoing or liability with respect to any allegations in the complaint.
There were no conditions of change to plan design or processes in the settlement agreement as has been seen in a few other cases that have settled.
The lawsuit against Gucci is an example of the trend of excessive fee lawsuits moving to smaller plans. A lawsuit filed by a participant in the Checksmart Financial 401(k) Plan was time-barred by a federal district court, and a $500,000 settlement was reached in a lawsuit alleging that fiduciaries to the $500 million 401(k) program offered by Pioneer Natural Resources USA breached their ERISA duties regarding investments and investment fees.More recently, a participant in the Greystar 401(k) Plan filed a proposed class action excessive fee lawsuit against the firm. In 2017, the Greystar plan submitted financial information and other forms to the federal government under plans with assets between $100 million to $250 million.
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