The plaintiffs in an Employee Retirement Income Security Act (ERISA) lawsuit filed against Prudential—which was subsequently dismissed—have submitted a second amended complaint to the U.S. District Court for the District of New Jersey.
The original lawsuit was dismissed in September, with the court’s dismissal order responding to an amended complaint filed by the plaintiffs. The September ruling was filed “without prejudice,” meaning the plaintiffs were given time to file yet another amended complaint.
In response to the second amended complaint, the Prudential defendants have already filed a motion to dismiss, arguing that the deficiencies in the previously rejected version of the complaint have not been corrected. They argue the court should once again find that the plaintiffs fail to allege sufficient facts or provide the substantial circumstantial evidence necessary for the court to reasonably infer that the Prudential defendants breached their duty of prudence. For context, the court’s prior dismissal states that fund fee and performance comparisons are insufficient to plausibly allege that the Prudential defendants’ selection and retention of certain challenged funds was imprudent.
The new amended complaint seeks to provide more detail about 14 different investment options allegedly offered in the plan and which the plaintiffs say should have been removed for excessive fees or poor performance. The plaintiffs point to meeting minutes supplied by Prudential in an attempt to demonstrate the offering of these funds was the result of an imprudent process.
“In addition to the fact that the funds provided a substantial additional revenue stream for Prudential, many of the Prudential-affiliated funds were unnecessarily expensive, consistently and considerably underperformed compared to their respective benchmarks, or both,” the complaint states. “By choosing the financial interests of Prudential over plan participants, the defendants caused participants to incur unnecessary costs and lose the opportunity to invest in more appropriate available funds.”
The plaintiffs argue prudent fiduciaries would have investigated alternative available investments in order to maximize the plan’s retirement assets in the interest of the participants. Instead, they claim the defendants “simply offered Prudential products because they were familiar options that provided additional benefits to Prudential and its affiliates.”
“This type of self-dealing and objective imprudence violates ERISA,” the complaint states.