Parties Agree to $48.5M Settlement in Pentegra Fiduciary Breach Case

Pentegra has agreed to pay $48.5 million to settle a complaint involving its multiple employer retirement plan, according to an unopposed motion filed July 2 in the U.S. District Court for the Southern District of New York. 

A jury awarded plaintiffs in the case, Khan et al. v. Board of Directors of Pentegra Defined Contribution Plan et al, more than $38 million in April following a week-long jury trial where the plan’s board, former CEO John E. Pinto and Pentegra Services Inc. were found liable for breaching their fiduciary duties under the Employee Retirement Income Security Act. 

After agreeing to settle separate allegations related to prohibited transactions, the parties agreed to the increased $48.5 million settlement to effectively resolve the case.  

The complaint, originally filed in September 2020, alleged that Pentegra breached its fiduciary duties by charging excessive recordkeeping and administrative fees and by retaining high-cost mutual funds and collective investment trusts in its plan.   

The plaintiffs also alleged that the company engaged in prohibited transactions in violation of ERISA by sticking with the allegedly mismanaged investments. 

As part of the latest settlement, the relief awarded to plaintiffs includes the plan conducting a request for proposal by an independent fiduciary for recordkeeping and administrative services and appointment of new plan fiduciary board members over time, said Troy Doles, one of the attorneys from Schlichter Bogard LLC who represented the plaintiffs, in a statement.  

The Groom Law Group represented Pentegra in the case. The law firm did not respond to a request for comment by press time.