The Neuberger Berman Group 401(k) plan investment committee will pay $17million to settle a lawsuit alleging it violated the Employee Retirement Income Security Act (ERISA) by maintaining the Neuberger Berman Value Equity Fund (VEF) as an investment option in its plan.
In September 2018, U.S. District Judge Laura Taylor Swain of the U.S. District Court for the Southern District of New York left only the plan’s investment committee as a defendant and only approved the prohibited transaction claim, dismissing all other defendants from the suit and dismissing the breach of fiduciary duty claims.
In response to that decision, the plaintiffs moved for leave to amend the complaint to provide further detailed factual allegations against which to compare the VEF performance and fees as circumstantial support for plaintiffs’ claims of breach of fiduciary duty, and to add a demand for a jury trial. In May 2019, Swain granted the plaintiffs leave to amend the complaint.
The settlement agreement notes that, in December, the VEF was removed as a plan investment option. For participants who did not elect to transfer their balances in the VEF to another investment option, their balances were mapped to an age-based target-date fund (TDF).
The parties notified the court on March 23 that they had reached an agreement to settle. The settlement agreement will have to be approved by the court.
According to the settlement agreement, “Defendant continues to deny all allegations of wrongdoing and denies all liability for the allegations and claims made in the action. Defendant maintains that it is without fault or liability and is settling the action solely to avoid litigation costs.”
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