Parties in a lawsuit alleging excessive investment and recordkeeping fees in Cerner Corp.’s Foundations Retirement Plan have asked a federal court for approval of a proposed settlement.
The settlement provides that Cerner or its insurers will pay $4.05 million to settle the lawsuit.
The parties also agreed to prospective relief, which includes Cerner issuing a request for proposals (RFP) for recordkeeping services for the plan as well as precluding employees employed within its investment relations function from serving on the retirement plan committee for a period of no less than three years.
Under the agreement, Cerner will also send an annual notice, for a period of no less than three years, to all plan participants reminding them about the benefits of investment diversification.
The original complaint says the defendants breached their Employee Retirement Income Security Act (ERISA) fiduciary duties by failing to objectively and adequately review the plan’s investment portfolio with due care to ensure that each investment option was prudent, in terms of cost, and maintaining certain funds in the plan despite the availability of identical or similar investment options with lower costs and/or better performance histories.
The plaintiffs argued that passively managed funds cost less than actively managed funds, institutional share classes cost less than investor share classes, and collective trusts and separate accounts cost less than their “virtually identical” mutual fund counterparts. They claimed that the defendants knew or should have known of the existence of cheaper share classes and/or collective trusts and should have immediately identified the prudence of transferring the plan’s funds into these alternative investments.
The complaint also accused the defendants of failing to monitor or control the plan’s recordkeeping expenses. The lawsuit alleged the plan fiduciaries failed to track the recordkeeper’s expenses by demanding documents that summarize and contextualize the recordkeeper’s compensation, such as fee transparencies, fee analyses, fee summaries, relationship pricing analyses, cost-competitiveness analyses, and multi-practice and standalone pricing reports. It accused the defendants of failing to identify all fees, including direct compensation and revenue sharing being paid to the plan’s recordkeeper.
About three months after the first lawsuit was introduced, a second one was filed that included similar allegations. That lawsuit was dismissed, and the plaintiff was allowed to join the first one.
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Reams selects fixed income professional as portfolio manager; Schroders announces recent hires in New York and Denver; ERISA attorney joins Jackson Lewis P.C.; and more.
Reams Selects Fixed Income Professional as Portfolio Manager
Reams Asset Management has announced that Dimitri Silva will join the firm as a portfolio manager. Silva’s areas of focus will be global interest rates, foreign exchange (FX) and securitized assets. He will assume his role in March.
Previously, Silva was a portfolio manager with AllianceBernstein, where he was a member of the fixed income absolute return, U.S. multi-sector, and global multi-sector portfolio management teams. Silva also led the fixed income tactical interest rate group that was responsible for all tactical interest-rate duration, country, curve and volatility views for the fixed income department.
“We are very excited to have Dimitri joining our team,” says Mark Egan, chief investment officer (CIO) and managing director at Reams. “He brings extensive knowledge and experience to Reams, which will expand our overall toolkit, but there is also a great deal of overlap between how Dimitri sees the world and how we see the world.”
“I’m thrilled to join the Reams team. Its track record of generating strong returns over the long term for clients speaks for itself,” Silva adds. “Mark and his team’s approach, which is to remain disciplined about long-term value but react decisively when market dislocations occur, is very much aligned with mine.”
Originally from Sri Lanka, Silva holds a bachelor’s degree from The College of Idaho and is a Chartered Financial Analyst (CFA).
Schroders Announces Recent Hires in New York and Denver
Schroders has added Alyse Kelly as senior portfolio manager and Nicholas Thompson as alternative institutional director of business development.
Kelly, who has more than two decades of investment experience, will be based in New York and report to Michelle Russell-Dowe, Schroders’ head of securitized credit. Prior to joining Schroders’ securitized credit team, Kelly was a director at Pretium focused on leveraged loans in the media, telecom, lodging, gaming, leisure and consumer products sectors.
Kelly previously held director roles at Valcour Capital and Aladdin Capital, having begun her career as a credit analyst at Standard & Poor’s.
In his new role, Thompson will focus on building Schroders’ ability to directly address client needs and grow the firm’s institutional distribution efforts and diversified product set across the western U.S. He will be based in Denver.
The firm says Thompson’s alternative investing expertise will assist the institutional team in providing targeted solutions to clients from its private assets platform.
He will report to Allan Duckett, institutional director, head of the West. Harnessing his prior experience and knowledge of the industry, Thompson will work with the team to elevate Schroders’ alternative strategies and build market capitalization across the asset class.
ERISA Attorney Joins Jackson Lewis P.C.
Travis DeHavenhas joined the Atlanta office of Jackson Lewis P.C. as a principal. DeHaven has more than 30 years of experience in all matters related to employee benefits and executive compensation.
“Travis’ arrival, combined with the bench strength of our existing employee benefits attorneys, gives us the ability to continue to provide the best in class counsel on complex benefits and executive compensation matters,” saysJoy M. Napier-Joyce, leader of the firm’s Employee Benefits Practice Group. “He is a seasoned attorney with a practical approach who will expand the depth and breadth of our practice. His approach is an asset for our clients navigating technical and complex benefits issues in a rapidly evolving business and regulatory environment. He is a welcome addition to the firm.”
DeHaven frequently provides strategic advice to boards of directors and advises plan fiduciaries and board members regarding their separate fiduciary duties, including those arising when company stock is offered as a form of plan investment. Additionally, he works with clients on plan administration compliance, including negotiating third-party service provider contracts and voluntary self-correction matters, qualified and nonqualified deferred compensation (NQDC) design and compliance, incentive compensation and equity plans and arrangements, compliance with Internal Revenue Code (IRC) 409A, and mergers and acquisitions (M&As).
Travis also provides Employee Retirement Income Security Act (ERISA) litigation support for clients. He was recently lead outside ERISA counsel inData Marketing Partnership et al v. U.S. Department of Labor et al.
Prior to Travis’ arrival at Jackson Lewis, he was a partner at Taylor English, Jones Day and Troutman Sanders. Travis had significant leadership responsibilities at two of his former firms, including leader of Troutman Sanders’ employee benefits and executive compensation practice.
“We are thrilled to welcome Travis to the Atlanta office,” says Office Managing PrincipalTodd Van Dyke. “Travis has notable experience in all areas of ERISA, employee benefits and executive compensation matters, which is a huge gain for our clients in the Southeast. His track record speaks for itself, and we look forward to seeing Travis’ contributions to the firm’s Employee Benefits Practice Group as we continue to grow in this space.”
Travis earned both his juris doctor and bachelor’s degree from the University of Georgia.
IRI Selects New Board of Directors Chair
The Insured Retirement Institute (IRI) has announced that John Kennedy,senior vice president, head of retirement solutions distributionat Lincoln Financial Distributors, is the new chair of the association’s board of directors.
“John has 30 years of demonstrated commitment, leadership and advocacy in the retirement income industry and has served on IRI’s board of directors for several years,” says Wayne Chopus, IRI president and CEO. “His passion and dedication will be a valuable asset to our organization as we navigate a still uncertain time for our industry and nation after 2020’s unprecedented challenges.”
The IRI Executive Committee voted for Kennedy to assume the board chair role last week. The full IRI board of directors is expected to ratify the executive committee decision next month.
“The Lincoln Financial team shares John’s commitment and excitement to help lead IRI and our industry, which aspires to help all American families achieve financial peace of mind in retirement,” says Will Fuller, executive vice president and president of annuities, Lincoln Financial Distributors and Lincoln Financial Network.
Fuller is a former IRI board member and recipient of IRI’s Leadership Award in 2014 and IRI’s 2019 Industry Champion of Retirement Security Award.
“We are fortunate to have such a deep well of talented leaders who are committed to IRI’s mission and vision and who are willing to contribute their time, energy and guidance to move our industry forward,” Chopus says. “We welcome John’s leadership as the new IRI board chair and look forward to the continued collaboration of our entire executive committee and board of directors to advance our strategic goals and objectives in the coming year.”
