A lawsuit contends that kickback payments Fidelity requires from investment funds bear no relationship to the cost or value of services provided and are a replacement for declining amounts of revenue sharing payments received by Fidelity as a result of the increasing use of passive mutual funds, institutional and R6 share classes of mutual funds and collective trusts.
Tag: retirement plan fees
The case is notable for arguing that an investment that had only a 4 basis point annual fee could have been replaced by one charging only 2 basis points.
A federal judge found that the plaintiffs provided more than enough evidence to support excessive fee claims, noting that, “Plaintiffs cite deposition testimony of Anthem employees and Pension Committee members who indicate they do not understand the difference between different kinds of share classes or did not ask Vanguard whether lower-cost fee arrangements were available for the plan.”
According to the complaint, TIAA has been able to extract “grossly excessive fees” because its fees are tethered not to any actual services it provides to the plan, but rather, to a percentage of assets in the plan.
Callan’s 2019 Defined Contribution (DC) Trends Survey finds more plan sponsors have conducted fee benchmarking, there’s a shift in who is paying fees and trends regarding revenue sharing have changed.
The settlement agreement calls for a gross monetary payment of $10.65 million to a settlement fund and other non-monetary actions by Duke University.
In a case that alleges, among other things, that defendants breached their ERISA duties by offering a money market fund rather than a stable value fund as a capital preservation option, plaintiffs say the 9th Circuit imposed strict pleading standards that conflict with its own decisions as well as those of other circuits.
The case against the $500 million 401(k) plan was also settled for a “small” amount—$500,000.
After a complex set of motions and rulings, the parties have now opted to settle the ERISA self-dealing lawsuit rather than proceed to the full trial.
The 9th U.S. Circuit Court of Appeals found that the facts alleged are insufficient to support a plausible inference of breach of the duty of loyalty, breach of the duty of prudence, or that a prohibited transaction took place.
The docket reports for two lawsuits filed against the university say counsel for the plaintiffs and counsel for the university have reported the cases settled.
However, a federal district judge moved forward most claims in the self-dealing lawsuit concerning the company’s own 401(k) plan.
Sharing findings of a recent Capital One survey, Stuart Robertson says there is opportunity to educate employees about the tax-deferred status of retirement plan contributions and retirement plan investment fees.
A lawsuit alleges that the defendants failed to take advantage of the plans' bargaining power by only offering actively managed retail mutual funds as investment options.
The lawsuit not only calls out Fidelity’s use of all proprietary funds in its 401(k) investment lineup, but also accuses it of not negotiating for revenue sharing rebates, not using the lowest-cost share classes, not investigating alternative investment vehicles and not evaluating stable value fund options when its money market funds poorly performed.
The original complaint accuses T. Rowe Price 401(k) plan trustees of breaching their fiduciary duties under ERISA by either failing to remedy their predecessors’ breaches, or, in a few cases of offering expensive retail class versions of proprietary mutual funds, waiting too long to act to shift into lower cost versions of the funds.
While the first lawsuit focused on excessive recordkeeping, administrative and investment fees, the new lawsuit focuses specifically on the university’s practices with regard to revenue sharing.
The EBSA’s Plan Investment Conflicts (PIC) project have reviewed conflicts of interest of fiduciary service providers and investment managers of plan asset vehicles that led to conflicted decision making processes, imprudent application of investment guidelines and the payment of excessive fees.
The bank has agreed to pay $21.9 million to settle charges it benefited from including proprietary funds in its 401(k) plan.