Another two asset management firms are the subject of separate (401)K lawsuits filed by their employees . The plaintiffs claim that American Century and New York Life, respectively, charged excessive fees in their retirement savings plans.
In Andrus et al v. New York Life Insurance Company et al , a class action lawsuit, plan participants in the the Employee Progress-Sharing Plan and the Agents Progress-Sharing Plan contend that New York Life and affiliated fiduciaries engaged in self-dealing when they kept a MainStay-branded S&P 500 index mutual fund i both retirement plans. New York Life and the subsidiaries own the MainStay brand fund.
The plaintiffs believe that they improperly benefited from “excessive fees and expenses.” They argued that because the defendants have a financial interest in the mutual fund, they neglected to look for lower-cost funds between ’10 and now. Instead, they kept the MainStay fund, which cost 35 basis points, in the two 401(k) plans. They say that this cost participants more than $3M. The plaintiffs are alleging breach of loyalty and prudence under ERISA.
In Wildman et al v. American Century Services, LLC et al, also a class action case , employees of American Century Companies, Inc., the parent company of American Century Investments, are claiming breach of fiduciary duty under ERISA.
They believe that they were charged excessive fees for recordkeeping and investment management. The plaintiffs contend that American Centuries engaged in self-dealing since 2010 by including only proprietary investment options in the investment menu for the American Century Retirement Plan.
hey argued that that the asset management firm could have also included other investment options that performed just as well or better and would not have cost as much as the proprietary investments. They allege that the proprietary options cost them millions of dollars in fees.
The plaintiffs are accusing the fiduciaries of permitting “grossly excessive” revenue-sharing payments to Schwab Retirement plan Services Inc. and JPMorgan Retirement Plan Services, who were record keepers of the 401(k) plan.
401(K) Lawsuits
Already, plaintiffs of other 401(K) lawsuits alleging excessive fees have won multimillion-dollar settlements, including the $31M that Massachusetts Mutual Life Insurance Co. agreed to pay last month. Ameriprise (AMP) paid $27.5M and Fidelity paid a $12M settlement to resolve 401(k) excessive fee lawsuits.
Also dealing with its own401(k) lawsuit is Cetera. The independent brokerage firm is a codefendant in a complaint filed against the fiduciaries of the Checksmart 401(k) plan.
The plaintiffs in that case claim that fiduciaries breached their duties under ERISA when they allowed participants to be charged “grossly excessive” fees for investments that did poorly over six years. They contend that Cetera is a “co-fiduciary” of the Checksmart 401(k) plan under ERISA.
The plaintiffs are questioning the plan’s strategy of holding more active funds than passive funds. They said that active funds are “extremely expensive” and seldom add enough value to justify the greater cost.
Our securities fraud lawyers represent investors with claims to recoup their losses caused by the negligence, ill-management, or wrongful actions of financial firms or their representatives. Contact The SSEK Partners Group today.
Lawsuit Accuses American Century of Self-Dealing in 401(k), PlanAdviser, July 5, 2016
New York Life sued by employees claiming excessive 401(k) fees, Business Insurance, June 21, 2016