A $14 million settlement has been reached in a lawsuit accusing John Hancock Life Insurance Co. of self-dealing in its defined contribution (DC) plan.
The proposed class action suit suggested that John Hancock breached its Employee Retirement Income Security Act (ERISA) fiduciary duties “by applying an imprudent and inappropriate preference for John Hancock products within the plan, despite their poor performance, high costs and lack of traction among fiduciaries of similarly sized plans.” In addition, the self-dealing lawsuit accused the firm of failing to monitor or control the plan’s administrative expenses, allegedly costing the plan millions of dollars in excessive administrative fees over the course of the class period.
Last year, a district court judge denied the defendants’ motion to dismiss the case.
The settlement agreement also includes prospective relief in which the defendants agree to:
- retain an independent third-party investment consultant to provide ongoing monitoring and review of the investment options in the plan’s investment lineup for at least five years from the settlement effective date;
- develop and approve an investment policy statement (IPS) for the plan; and,
- use the services of an independent consultant to assist with negotiating the next recordkeeping agreement and issuing a request for information (RFI) for recordkeeping services at or before the expiration of the plan’s current recordkeeping contract.