Employees Banned from Trading Some Funds

A recent news report from Reuters revealed that T. Rowe Price Group Inc. permanently banned about 1,300 American Airlines employees from trading among its funds in their 401(k) retirement plans.

In addition, another 800 employees received warning letters about their trading patterns, according to news report.

The ban follows several years of T. Rowe Price imposing temporary trading restrictions on some subscribers to the EZTracker LLC newsletter for American Airlines employees, which suggested monthly mutual fund trades to those who invest in the company’s defined contribution plan.

T. Rowe Price Spokesman Bill Benintende said in the news report that such collective trading can disrupt portfolio managers’ strategies and raise costs for long-term investors. He added that in limited situations, the company’s funds restrict investors who significantly alter their holdings on the advice of a newsletter.

T. Rowe Price did not respond to inquiries from PLANSPONSOR for comments on this matter.

An American Airlines spokesman said in the news report that the company has acted appropriately in its role as plan sponsor, adding that despite the ban, all plan participants still can put new payroll deductions into T. Rowe Price’s funds or cash out of them. They cannot trade among the four T. Rowe Price funds in the plan, which has about 26 other investment choices.