According to the recent complaint, Fidelity has breached its fiduciary duties to retirement plans by charging mutual fund and other investment companies a substantial fee as a condition for their investment vehicles being offered on Fidelity’s fund platform.
Comparing Employee Retirement Income Security Act (ERISA) cases to trust law cases, a federal judge decided to side with "the great weight of authority in the federal courts holding actions under ERISA to remedy alleged violations of fiduciary duties are equitable in nature," so there is no right to a jury trial.
The 401k Averages Book also shows smaller plans continue to pay higher fees than large plans.
The lawsuit accuses Fidelity of requiring "secret" payments from funds to make up for declining amounts of revenue sharing payments received by the firm as a result of the increasing use of passive mutual funds, institutional and R6 share classes of mutual funds and collective trusts
The defendants were denied summary judgment on all claims.
No reason was given for why the plaintiff decided on the voluntary dismissal.
In the majority of cases, plan sponsors that participated in Callan’s 2019 Defined Contribution (DC) Trends Survey said their plan consultant/adviser conducted fee benchmarking, and in 2019, sponsors will be looking to switch to lower-fee share classes and to more institutional vehicles.
In addition to a gross monetary payment of $10.65 million, the university agreed to other non-monetary actions.
Plaintiffs in the case say the appellate court held them to stricter pleading standards than it did plaintiffs in other Employee Retirement Income Security Act (ERISA) lawsuits.
The settlement agreement leaves open a chance to bring a new claim regarding the offering of a money market fund in the plan.
The plaintiffs accused Edward Jones of favoring its own investments and those of its “preferred partners” in its 401(k) plan, at the expense of performance; they also raised questions about excess recordkeeping fees.
The appellate court found that the allegations showed only that Chevron could have chosen different vehicles for investment that performed better during the relevant period, or sought lower fees for administration of the fund, not that any breach of ERISA duties had occurred.
One case focused on excessive fees for recordkeeping, administrative, and investment services, and the other focused on revenue sharing.
However, a federal judge gave the firm a win on a claim that its recordkeeping fees were unreasonable.
Findings from a Capital One survey about why employees do not participate in their employer-sponsored retirement plan offers opportunities for education, according to Stuart Robertson.
The complaint specifically calls out the 11 T. Rowe Price target-date funds (TDFs) offered by the plans, saying they are all adviser or retail class funds—as opposed to investor or institutional class funds.
In addition to self-dealing allegations, the complaint calls out Fidelity for not negotiating revenue sharing refunds for its 401(k) plan participants and not considering stable value options for its plan investment lineup, among other things.
Claims that survived included fiduciaries breached their duties of loyalty and prudence in their selection and monitoring of investments, fiduciaries failed to monitor other fiduciaries, plan trustees failed to remedy actions of predecessors, and the fiduciaries engaged in prohibited transactions.
The new lawsuit alleges the university engaged in prohibited transactions when it used revenue sharing from plan investments to pay for HR staff salaries and fringe benefits.
The Department of Labor’s (DOL)’s Employee Benefit Security Administration’s (EBSA)’s Plan Investment Conflicts (PIC) project investigates issues related to fiduciary service provider compensation and conflicts of interest in relation to plan asset vehicles.