According to Bloomberg, the retirement plan set up for the employees of the Orange County (Florida) Sheriff’s Office claims that ING falsely characterized the payments as reimbursement for services provided to the mutual funds.
The plan not only wants to recover the revenue sharing payments and end the practice, but also wants the case to have class action status, which would allow the plan to sue ING on behalf of all similar deferred compensation plans nationwide that bought group annuity contracts from ING’s Hartford-based life insurance and annuity unit.
“The revenue sharing payments are calculated as a percentage of plan participants’ assets invested in the mutual funds through ING,” the plan said in its complaint, according to Bloomberg. “Those amounts bear no relationship whatsoever to the cost of providing the services or a reasonable fair market value for the services.”
The claim by the Orange County Sheriff’s Office is its second in recent months against a provider. The office sued in November 2006 its former provider Nationwide Life Insurance Co. in the US District Court in Columbus, Ohio, charging that the firm would offer mutual funds to deputies and other investors only if the family of funds also paid the company a fee (See FL Sheriff Sues Nationwide Over Fees).
The Dutch bank had also been the target of an investigation by former New York Attorney General Eliot Spitzer over its fee structure. Spitzer alleged ING took fees in exchange for promoting particular funds in retirement plans and failed to disclose those fees. ING agreed to a $33 million settlement in October.
A racetrack in Illinois recently sued Principal Financial Group over its revenue-sharing practices, alleging that the firm breached its fiduciary duties in its arrangements with the mutual funds whose offerings are included in Principal’s 401(k) product (See Plan Sponsor Sues Principal over 401(k) Fund Revenue Sharing).