The law firm of Schlichter, Bogard
& Denton has filed four more lawsuits against major universities for
excessive fees in its 403(b) plans.
Cornell University, Columbia University, Northwestern University and the University of Southern California are the latest targets. This is the second lawsuit filed this week against Columbia University, as another law firm filed a complaint with similar allegations.
with the previous lawsuits filed by Schlichter, the complaints call out
the large number of investment options offered to participants, high
expenses for these investment options and the use of multiple
recordkeepers, resulting in duplicative expenses for recordkeeping
The lawsuit against the University of Southern
California notes that in March 2016, the university made certain changes
to its plans. It removed one of the plan's four recordkeepers for
future contributions, eliminated hundreds of mutual funds, removed
certain fixed and variable annuity investment options, and froze
contributions to certain other fixed and variable annuity investment
options. The changes made by the university resulted in participants now
being offered a total of approximately 34 investment options, rather
than 340, across the plans’ three remaining recordkeepers.
However, the complaint
says, despite these changes, the defendants in the case continue to
include high-priced investment options in the plans, retain three
recordkeepers, and continue to allow excessive recordkeeping fees to be
charged to the plans. The complaint also alleges that as part of the
communications about the changes to participants, the university
acknowledged that the plans’ previous structure caused the plans to pay
unreasonable recordkeeping and investment fees.
The Northwestern University complaint
also notes that in 2016, the university eliminated hundreds of mutual
funds provided to plan participants and selected a tiered structure
comprised of a limited core set of 32 investment options.
Attorneys feel the distinctions between 403(b)s and 401(k)s may give 403(b)s different arguments in such lawsuits.