A new complaint has been filed in the U.S. District Court for the Northern District of Georgia in the Employee Retirement Income Security Act (ERISA) lawsuit known as Fleming v. Rollins Inc.
A complaint filed by the plaintiffs was previously dismissed, mainly on technical grounds pertaining to the plaintiffs’ failure to fully utilize and exhaust administrative proceedings prior to filing their lawsuit.
The underlying complaint accuses the defendants, which include the Rollins Inc. company and its subsidiary Western Industries, of having imprudently selected higher-cost actively managed mutual funds and retail share classes over the lowest cost institutional share classes of the same mutual funds. The plaintiffs also alleged the defendants improperly favored the economic interests of the plans’ service providers, allowing them to collect excessively high fees from the plans’ participants.
Distinguishing it from the original lawsuit, the new complaint levels allegations against several financial services providers involved in the operation of the retirement plan in question, including Alliant Insurance Services, Alliant Retirement Services and LPL Financial. It also includes new allegations against the plan sponsor for alleged failures in its process of monitoring the actions and performance of these providers.
Early on, the new complaint states that the plaintiffs have allegedly engaged in and exhausted an administrative appeal process directly with the plan sponsor defendants—a process that allegedly began in December 2020 before concluding in May 2021. It then turns to alleging that certain advisory professionals who served the plan during the class period were not properly licensed or were not otherwise in good standing with regulators but were nonetheless still allowed by the plan sponsor defendants—which include various individuals and plan committees—to work with the plan and its participants.
For example, in one section, the complaint alleges that the an adviser serving the firm failed to disclose that he had been terminated by his broker/dealer (B/D) for participating in private securities transactions without providing written disclosure to and obtaining written approval from the firm, and for engaging in a business transaction that created a potential conflict of interest without providing written disclosure and obtaining written approval from the firm.
“Rollins and the administrative committee could have easily discovered the covered service provider’s regulatory and disciplinary matters … by making a phone call to FINRA [Financial Industry Regulatory Authority] or the SEC [Securities and Exchange Commission], or by running a simple Google search,” the complaint states.
The text of the complaint includes an extensive number of related allegations against the plan’s adviser and sponsor, including allegations that suggest the plan sponsor and adviser made imprudent investment decisions that went uncorrected for an excessive amount of time. The plaintiffs allege these failures were the result of an imprudent administrative and oversight process.
Other allegations suggest the plan sponsor failed to recognize that payments made by the plan were impermissibly directed through a “shell company” that allegedly was set up for the benefit of the accused adviser and which did not actually provide services to the plan.
“Based on the Forms 5500, the total amount paid directly from the Rollins plan’s trust to the covered service provider for unnecessary services between 2009 and present was $1,007,613,” the complaint states.
The full text of the complaint is available here.
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