A settlement agreement has been reached in a case accusing Northrop Grumman and its 401(k) administrative and investment committees of various breaches of Employee Retirement Income Security Act (ERISA) fiduciary duties.
While denying all liability for the claims made in the lawsuit and maintaining that they are without any fault or liability, the defendants have agreed to pay a gross settlement amount of $12,375,000 to resolve all claims.
According to the original complaint, the defendants—including Northrop—“acted to benefit themselves and Northrop by paying plan assets to Northrop purportedly for administrative services Northrop provided to the plan, which were not necessary for administration of the plan or worth the amounts paid. Defendants also caused the plan to pay unreasonable recordkeeping fees to the plan’s recordkeeper and mismanaged the plan’s emerging markets equity fund.”
The plaintiffs also accuse the plan and its administrative and investment committees of allowing its recordkeeper to receive fees from an agreement with Financial Engines to provide participants with investment advice.In February 2018, most counts in the case were dismissed against the company, with the court finding it was not a fiduciary with respect to the acts alleged. However, Northrop Grumman did not escape the failure to monitor fiduciaries count.