Wal-Mart and Merrill Lynch to Pay $13.5M for Excessive Fee Suit

According to Forbes, Wal-Mart and its retirement plan administrator (Merrill Lynch) allegedly breached their fiduciary duty for nearly two million past and present Wal-Mart workers in the company’s 401(k) plan.

Forbes says that according to papers filed in a Kansas City federal court, the two defendants admitted no wrongdoing. However, Wal-Mart said it would “further its goal to offer investment options with fees that are reasonable,” remove mutual funds that charge high fees and provide more financial education to its employees.

The article states Wal-Mart employees will not directly receive the 13.5 million from the settlement. The settlement will go directly toward reducing future 401(k) plan fees. However, named plaintiff Jeremy Braden will receive $20,000 from the settlement funds.

Also, lawyers representing the class could receive as much as $4 million of the settlement. A court hearing that will approve the settlement and the fees will be held several months from now.

When PLANSPONSOR asked for comment on the settlement, Matthew Card, vice president, communications, Bank of America said, “We are pleased to have been able to work with Wal-Mart to resolve this matter and continue to serve its employees with a high-quality 401(k) platform.”  

The lawsuit was originally filed in 2008 by Braden, a Wal-Mart employee in Highlandville, Missouri. The lawsuit charged that Wal-Mart—which is known for getting the best prices from suppliers to pass the lowest possible prices onto consumers—did not attempt to do this with the mutual funds offered in its 401(k) plan. Wal-Mart offered employees 10 investment options, most of them mutual funds, charging high fees. The lawsuit alleged various violations of fiduciary duty and federal pension law.(See Wal-Mart Hit with Excessive 401(k) Fee Suit). 

The trial judge’s dismissal of the case was reversed by the federal court of appeals in St. Louis, Missouri. In an amended complaint, Braden added Merrill Lynch to the suit as a defendant, alleging the investment firm received undisclosed kickback payments from outside mutual fund companies just for allowing them to be in the plan, reports Forbes.

Another interesting aspect to the settlement of the case is Merrill Lynch will end up paying $10 million of the 13.5 million.

Also see Wal-Mart Captures Resounding Excessive Fee Suit Victory and 8th Circuit Says Wal-Mart 401(k) Suit Requires Further Discussion.