A motion for preliminary approval of a settlement agreement in a case challenging the administration and fees for the Brown University 403(b) plan has been filed.
According to the settlement agreement, Brown University would pay $3.5 million as compensation to a class of current and former participants. Recently, a federal judge in the U.S. District Court for the District of Rhode Island allowed to proceed plaintiffs’ allegations that a prudent fiduciary would have chosen one—rather than two—recordkeepers; that a prudent fiduciary in like circumstances would have solicited competitive bids; and a claim regarding recordkeeping fees.
The agreement also calls for Brown to use commercially reasonable best efforts to continue to try to further reduce recordkeeping fees from the plans’ two recordkeepers for a period three years from the date of final approval of the settlement, and in the event that fees increase despite Brown’s efforts, it will notify participants and explain the occurrence. Under the agreement, Brown will also conduct a request for proposal (RFP) process for the role of independent investment adviser to the plans.Brown University must hire an independent fiduciary “whose sole loyalty is the settlement class” to evaluate the settlement and provide a report authorizing it.