MIT Response to Epstein Donations Suggested as New Evidence in Lawsuit

The plaintiffs in the ERISA lawsuit say they intend to seek injunctive relief preventing MIT from hiring vendors for its retirement plan that are donors or accepting donations from existing vendors to the plan.

The plaintiffs in an Employee Retirement Income Security Act (ERISA) lawsuit alleging mismanagement and disloyalty on the part of Massachusetts Institute of Technology (MIT) defined contribution retirement plan fiduciaries have requested leave to file new evidence of MIT President Rafael Reif’s unique knowledge related to the case.

The plaintiffs say that new evidence came to light after they filed an opposition to the defendants’ Motion in Limine 2 seeking to prevent the testimony of Reif and former chairman John Reed.

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According to the court document, in response to revelations that improper donations were received by MIT from the now-deceased financier Jeffrey Epstein, who was involved in a criminal investigation, Reif addressed what MIT’s policy for improper donations would be in the future. He also “asked MIT’s General Counsel to engage a prominent law firm to design and conduct [a thorough and independent investigation].”

The plaintiffs also noted that in an earlier letter to the MIT Community, Reif said “decisions about gifts are always subject to longstanding Institute processes and principles” and “despite following the processes that have served MIT well for many years, . . . we made a mistake of judgment.” They contend this new declaration reveals that Reif is uniquely responsible for the oversight of MIT employees and the investigation, compliance and enforcement of conflict of interest policies related to donations.

The plaintiffs are seeking to inquire about whether the policy changes Reif instructed the committee to investigate include donations to MIT from MIT Supplemental 401k Plan vendors paid by employees’ retirement assets. “His failure to initiate the same type of investigation related to Fidelity’s gifts and donations to MIT, both today and in the past, is something to which only Reif can testify,” the plaintiffs state.

They also note that two of Reif’s subordinates received gifts from Fidelity and instructed their subordinates to stop all actions related to the plan’s payment of fees to Fidelity. The plaintiffs point out that one of Reif’s subordinates did not disagree with an email stating that MIT expected large donations after retaining Fidelity as the plan’s service provider.

“These and other disturbing engagements with the Plan’s primary service provider, Fidelity, went uninvestigated and unchecked,” the plaintiffs state. They add that they intend to seek injunctive relief preventing MIT from hiring vendors for the plan that are donors (or foundations controlled by common ownership with the vendor) or accepting donations from existing vendors to the plan.

U.S. District Judge Nathaniel M. Gorton of the U.S. District Court for the District of Massachusetts last week moved forward most claims in the lawsuit, but granted summary judgment to the defendants for a claim alleging a prohibited transaction between MIT and Fidelity Investments.

Edmit and NFP Partner to Build College Planning Feature

As student loan debt reaches an all time high, the two firms are pushing the conversation on what families must know early on about college funding. 

Software and student loan advice provider Edmit has partnered with insurance broker and consultant firm NFP to provide families with access to college financial planning.

The partnership offers NFP clients access to Edmit’s advisers and online tools, including Edmit Plus, and looks to assist those families new to the college search process by determining best value and return on investment (ROI), and understanding how to pay for tuition via scholarships, financial aid, student loans and work study.

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“Edmit was founded because college is one of the biggest financial decisions we make in our lives, but it’s hard to get advice on how to do that,” Sabrina Manville, cofounder of Edmit, tells PLANADVISER. 

Edmit works with families to go through the different options before selecting a school of choice. This includes considering student loans, calculating cost and scholarship estimates, and learning about resources to pay for college, according to Manville. Other offerings include personalized advice and estimates on the affordability for each school. Clients of NFP will receive a special pricing for the benefit, which will be based on employer size, according to Manville.

The objectives of the new partnership align with a recent study by Fidelity Investments, which found that 47% of Americans advise future college students to do more research on saving, scholarships and grants to decrease out-of-pocket cost. Other recommendations include saving as early as possible for college (37%), understanding the financial toll of borrowing student loans (34%), and acquiring as little debt as possible (34%). The “College Savings: Lessons Learned” study also highlights the importance of a 529 savings account; only 17% in the study had opened one before attending college.  

When asked how they went about affording higher education, 41% of respondents say they had to cut back on other expenses; 38% went back to work or acquired a second job; and 29% lived at home and commuted instead of living in a dormitory. A small number of others packed more classes in their semesters to graduate earlier (13%) and some took online courses for class credit (17%).

Another factor when planning for college is the importance of communicating as a family. The study finds that for many respondents, family conversations surrounding college funding remain taboo. Only one in four participants suggest discussing these finances with parents and family early on in the college planning process. Fidelity Investments recommends families speak to an adviser or create a plan of their own.

The Edmit and NFP partnership hopes to work with those families cautious to discuss their college planning finances. The college planning process—minus the finances—is stressful enough, says Manville. Discussing options opens employees up to their own financial situation, while understanding the best choices and goal targets for them.

“We’ve seen stories of how expensive college is and how difficult college is,” says Manville. “So we work with families as they’re thinking about where to go to college, and find a college where they can take the right loans for the right school.”

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