Seattle-based Keller Rohrback L.L.P. on Saturday announced that it is investigating the National Education Association (NEA) Valuebuilder 403(b) variable annuity plan. The plan, which is sold by Security Benefit, is the only retirement program endorsed by the NEA, according to a Keller Rohrback press release. The law firm claims that in exchange for the endorsement, Security Benefit provides compensation to the NEA.
Keller Rohrback says it is evaluating whether the NEA endorsed the program because of the payments, as opposed to a prudent evaluation of whether the plan is in the best interests of NEA members – a focus that has been present in other recent litigation (See The Bottom Line: Share Alike ).
Additionally, the firm notes that a common 403(b) plan investment option is a variable annuity, and that “403(b) annuity plans often charge excessive fees that substantially diminish participants’ retirement savings.”
Just last week a suit filed on behalf of of participants in the New York State United Teachers Member Benefits Trust, claimed that the teachers’ trust exclusively backed a high-fee annuity investment offered by ING – and that in so doing, breached its fiduciary duty by taking millions of dollars from the ING Life Insurance and Annuity Company so it would endorse ING’s products to its members (see NY Plan Sued for Fiduciary Breach over ING Fee Setup ). That suit grew out of legal action in 2006 by then-New York Attorney General Eliot Spitzer. After a year-long investigation, Spitzer found that ING and the trust had an endorsement arrangement that was not disclosed to trust members and settled with the trust last June and with ING last October. Without admitting or denying the accusations, ING agreed to pay $30 million. About 55,000 beneficiaries of the trust were to receive approximately $450 each under the settlement (See The Bottom Line: Share Alike ).
In late February, several Indiana teachers filed suit accusing MetLife and a financial consultant of rigging their 403(b) investment options. That lawsuit contended that MetLife paid Indiana Teachers’ Association Administrative Services to promote the firm over other insurance options in an effort to control up to $1 billion in retirement funds (see Teachers Sue MetLife, Consultant for Rigging 403(b) Options ). The suit alleged that in 2006, one of MetLife’s investment plans cost members about 30% more in annual fees than comparable plans.
Keller Rohrback serves as lead and co-lead counsel in numerous ERISA class action cases, including cases against Enron, WorldCom, Inc., HealthSouth, and Marsh & McLennan Companies (see Participant Shareholders Strike Back at WorldCom ), as well as ERISA cash balance pension plan cases (see Citigroup Under Investigation for Cash Balance Conversion ). It recently launched one of the first company stock investigations on a firm snagged in the sub-prime lending scandal (see Stock Drop Triggers ERISA-Oriented “Investigation ).
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