Complaint Against American Express Alleges 401(k) Underperformance, Conflicts

Participants in American Express Co.’s 401(k) plan filed a complaint in federal court on May 15, alleging fiduciaries kept the plan’s assets invested in a poorly performing custom target-date suite and included imprudent funds in the plan menu due to conflicts of interest.

Rivetti v. American Express Co., filed in U.S. District Court for the Southern District of New York, alleges plan fiduciaries breached their fiduciary duty under the Employee Retirement Income Security Act. The plan’s qualified default investment alternative—a suite of custom target-date funds spanning vintages from 2025 through 2060—allegedly underperformed its benchmarks and was invested largely in other challenged funds, effectively compounding the harm.

The plaintiffs allege that plan fiduciaries selected and retained investments that persistently underperformed benchmarks and comparable funds, resulting in hundreds of millions of dollars in losses, although no exact amount was named.

“[The] defendants had an obligation to prudently curate a menu of investment options for the plan,” the complaint states. “They must regularly monitor those investment options and remove ones that can no longer be prudently included in the plan’s investment lineup. … [The] defendants systematically failed those responsibilities.”

The plaintiffs also allege that fiduciaries were influenced by a conflict of interest. According to the complaint, the plan’s international equity fund and certain core funds within the target-date series allocate significant assets to Morgan Stanley Investment Management. American Express maintains broader business relationships with Morgan Stanley, including a co-branded credit card partnership renewed in December 2023. Morgan Stanley is also a joint book-running manager in American Express debt offerings. The complaint also cites American Express’ own Form 11-K, which identifies Morgan Stanley as “a party-in-interest to the plan.”

The complaint states that this relationship creates a “plausible inference” that fiduciary decisions were influenced by factors other than participants’ best interests.

The American Express plan had nearly $9 billion in assets and nearly 40,000 participants with account balances as of December 31, 2024, according to the complaint. American Express did not respond for comment.

Last year, 53 ERISA class action lawsuits were filed that alleged imprudent investments, and 48 were filed in 2024, according to analysis by Encore Fiduciary, an insurer for employee benefit plans.