Xerox Corporation has agreed, in principle, to settle a 401(k) lawsuit with plaintiffs who alleged plan fiduciaries mismanaged the retirement plan by passing on to participants excessive fees for recordkeeping services.
Xerox will pay the $4.1 million gross settlement amount into a common fund established for the benefit of the settlement class and agree to intended provisions for prospective relief to plan participants, the court filing shows.
“Xerox maintains the company acted prudently and loyally at all times when acting in any fiduciary capacity with respect to the plan,” a spokesperson wrote in an email regarding the litigation. “The settlement avoids the risk and uncertainty of further litigation for both parties.”
Per the settlement, no later than five years from the effective date of the agreement, defendants will use an independent consultant to assist with a request for proposal, fee benchmarking study or other comparative analysis to ensure that the plan’s recordkeeping fees remain competitive, according to the plaintiffs memorandum of law in support of motion for preliminary approval of class action settlement
The settlement and motion for approval follow a full-day on October 11, in-person mediation with mediator David Geronemus, the filing shows.
The plaintiffs, represented by firms Nichols Kaster and Garrison, Levin-Epstein, Fitzgerald & Pirrotti, asked in their filing that the court approve the proposed settlement, calling the relief it grants “meaningful.”
“This relief directly addresses the core issue that plaintiffs raised in the lawsuit and is designed to ensure that the plan’s expenses are reasonable going forward,” plaintiffs’ attorneys wrote in the filing.
“This is a significant recovery for the class compared to the claims that were alleged, and it falls well within the range of negotiated settlements in similar ERISA cases,” the attorneys for the plaintiffs wrote. “The settlement also provides for meaningful prospective relief, as defendants have agreed to retain an independent consultant to assist them in ensuring that the plan’s recordkeeping fees remain competitive in the future by means of a request for proposal, fee benchmarking study, or other comparative analysis.”
The plaintiffs motion asks the court enter an order:
Preliminarily approving the settlement.
Approving the proposed notices and authorizing distribution of the settlement notices to the settlement class.
Certifying the proposed settlement class.
Scheduling a final approval hearing.
And granting any other relief described in the proposed preliminary approval order.
“Although defendants dispute the allegations and deny liability for any alleged violations of ERISA or any other law, they do not oppose relief sought in this motion,” the attorneys wrote.
Xerox filed with the court a motion to dismiss the complaint, that was heard and denied by Judge Sarala V. Nagala, in U.S. District Court for the District of Connecticut, earlier this year.
The proposed settlement applies to all participants and beneficiaries of the Xerox Corporation Savings Plan at any time from August 11, 2015, until January 1, 2021—excluding anyone responsible for the plan’s administrative functions or expenses—according to the plaintiffs’ attorneys motion for preliminary approval.
Based on the information provided by defendants, there are approximately 36,000 settlement class Members, according to the document.
Although not published with the memo, a copy of the class action settlement agreement was attached as Exhibit A to “an accompanying declaration of plaintiffs’ attorney Brock Specht,” with the Nichols Kaster firm, the court filing shows.
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Ameriprise testing retirement income planning service; Vanguard adds short-term tax-exempt bond ETF; Franklin Templeton starts ClearBridge sustainable infrastructure ETF; and more.
The Vanguard Short-Term Tax-Exempt Bond ETF will be a municipal bond index ETF managed by the Vanguard Fixed Income Group, according to the Valley Forge, Pennsylvania-based company.
The ETF is designed for investors seeking to generate tax-exempt yield in their portfolios while minimizing interest rate sensitivity, according to Vanguard. The ETF will predominantly hold short-term investment grade municipal bonds and will track the S&P0-7 Year AMT-Free Muni Bond index. It will have an estimated expense ratio of 0.07%, which compares to 0.54% for the average short-term bond fund, according to Vanguard and Refinitiv Lipper data as of December 31, 2021.
“The new Short-Term Tax-Exempt Bond ETF has been thoughtfully constructed for tax-sensitive investors with a short time horizon and low risk tolerance, in complement to our broad range of municipal bond strategies,” Daniel Reyes, head of the Vanguard portfolio review department, said in a press release.
Separately, Vanguard also announced plans to modify the investment advisory arrangement of its $3.1 billion Vanguard Mid-Cap Growth Fund.
RS Investments will no longer serve as an adviser to the fund, and the adviser’s portion of the fund—approximately 20% of fund assets—will be transitioned to Frontier Capital Management, an existing manager on the fund, Vanguardannounced in a press release.
Following this change, Frontier will manage about 60% and Wellington Management Company LLP will continue to manage approximately 40% of the fund, according to Vanguard.
Ameriprise Testing Retirement Income Planning for Clients In or Near Retirement
Ameriprise Financialis piloting a new service with select clients in or near retirement to help them optimize and protect their money, the firm said through a spokesperson and in a brochure filed with theSecurities and Exchange Commission.
The Ameriprise Premier Retirement Income service is a retirement planning strategy that leverages Ameriprise’s current investment advisory work, according to the Minneapolis-based advisory and asset manager.
This service is exclusively for clients who are in or nearing retirement, have at least $1 million in investable assets and have at least $500,000 in Ameriprise-managed accounts, the spokesperson wrote in an email. Clients who want access will pay an annual 0.2% flat fee, based on their total managed account assets that are included in the service, according to the spokesperson.
The program is currently being tested by a select group from Ameriprise’s more than 10,000 financial advisers.
Franklin Templeton Starts ClearBridge Sustainable Infrastructure ETF
Franklin Templetonannouncedan expansion of its U.S.-based exchange-traded fund options with the launch of the ClearBridge Sustainable Infrastructure Exchange-Traded Fund, now listed on NASDAQ.
The new ETF will seek to invest in income-generating infrastructure assets with strong environmental, social and governance attributes and stable cash flows, according to the San Mateo, California-based Franklin Templeton. The fund may invest in the physical assets necessary for communities and economies to function and grow, including transportation, electricity, energy infrastructure, water, sewage, communications and renewables.
“Because of the many tailwinds for the asset class—the heightened focus on energy security in Europe, a supportive policy environment in the U.S. and the global push toward decarbonization of the global economy—it is a fantastic time for investors to diversify their portfolios with exposure to infrastructure,” Nick Langley, the portfolio manager for the ClearBridge Sustainable Infrastructure ETF, said in the release.
With the addition of INFR to its U.S. lineup, Franklin Templeton now has 59 ETFs with combined assets under management of about $10 billion.ClearBridge Investmentsis a specialist investment manager of Franklin Templeton.
John Hancock Launches International High-Dividend ETF
John Hancock Investment Management, which is owned by Manulife Investment Management, launched an international high-dividend ETF designed to seek a high level of current income, with long-term growth of capital as a secondary objective.
The John Hancock International High Dividend ETF invests at least 80% of its net assets in dividend-paying large- and mid-cap equity securities of non-U.S. developed-market companies, the Boston-based firmannounced in a press release. The dividend-paying large-and mid-cap equity securities are incorporated in, or have their primary listing exchange in, developed markets, excluding the United States, according to the firm.
“We anticipate a demand for equity income to continue into 2023 and beyond as investors refocus their portfolios,”Steve Deroian, co-head of retail product, said in the release.
The new ETF is actively managed and subadvised by Manulife Investment Management (US) LLC. John Hancock Investment Management now runs 10 ETF funds, the company said.
J.P. Morgan and Lincoln Financial to Merge Insurance Trust Funds for Enhanced Variable Insurance Trust Offerings
J.P. Morgan Asset ManagementandLincoln Financial Groupannounced a proposal for an enhanced partnership to have J.P. Morgan’s investment capabilities as part of Lincoln Financial Group’s platform, further enhancing Lincoln’sofferings of insurance, retirement and variable annuity solutions.
Through the agreement, shareholders of four J.P. Morgan insurance trust portfolios will be asked to approve a proposal to merge the VITs into four corresponding, newly formed series of Lincoln Financial Variable Insurance Products Trust, the companies said in apress release. The JPM VITs represent four of J.P. Morgan’s flagship investment strategies across equities and fixed income asset classes.
Pending shareholder approval of the merger, New York-based J.P. Morgan will serve as the subadvisor for each LVIP acquiring fund and will continue to manage the LVIP acquiring funds using its portfolio management teams and investment processes. Lincoln Investment Advisors Corporation (LIAC) will be retained as the investment adviser to each LVIP acquiring fund.
J.P. Morgan’s subadvisory business oversees $75 billion in assets under management across variable annuity and mutual fund products.
dxFeed Launches Index Based on Decorrelation Between Stocks and Crypto
dxFeed, a New York-based data solutions and index management provider, introduced a cryptocurrency index that minimizes the correlation with the broad stock market represented by the S&P 500 index.
The dxFeed Crypto Ortho 500 Index, or COSM, portfolio weights are optimized using a numerical procedure. The index can be used as an investment alternative to the broad market and may be used in portfolio diversification scenarios, the companysaid in a press release.
dxFeed is focused on financial information and services to buy- and sell-side institutions in the global markets, both traditional and crypto. That includes brokerages; prop traders; exchanges; individuals (traders, quants and portfolio managers); and academia (educational institutions and researchers).
Schwab Asset Management Announces Zero Capital Gains Distributions for Schwab ETFs for 2022
Schwab Asset Management, the asset management arm of the Charles Schwab Corporation, announced that there will be no capital gains distributions for the 2022 tax year by any of its 29 exchange-traded funds in the Schwab ETF family.
“Our focus on helping investors extends to our ability to deliver tax efficiency in different market environments, and we’re proud to have done that again this year,” David Botset, managing director and head of equity product management and innovation for Schwab Asset Managementsaid in a press release.
The Westlake, Texas-based asset manager is the fifth larger provider of ETFs with more than $260 billion in assets.
Stone Harbor Introduces Actively Managed Emerging Market High-Yield Debt ETF
Stone Harbor Investment Partners, an affiliated manager of Virtus Investment Partners and Virtus ETF Solutions, announced what it calls the first actively managed exchange-traded fund focused on emerging markets’ high-yield debt.
The Virtus Stone Harbor Emerging Markets High Yield Bond ETF offers exposure to the higher growth and diversified economic cycles that emerging markets provide, the Hartford, Connecticut-based firmsaid in a press release.
The ETF, which seeks current income and, secondarily, capital appreciation, actively allocates opportunistically across a diversified portfolio of emerging market high-yield debt securities, both sovereign and corporate, that are denominated in US dollars. The ETF is scheduled to pay monthly dividends, according to Stone Harbor.
Stone Harbor managed more than$10.2 billion of assets, as of September 30, 2022. Virtus ETF Solutions is a multi-manager ETF sponsor that offers actively managed and index-based investment capabilities across multiple asset classes, seeking to deliver a family of ETFs that are subadvised by select investment managers.
