Loose 401(k) Compliance has already resulted in serious litigation. The new DoL legislation may increase the legal liability for those who do nothing.
Here are 10 brand name employers that have already been sued. Click on the ten examples for more information:
1. Will, et al vs. General Dynamics Corp, Fiduciary Asset Management LLC of Clayton (FAMCO)
Class Action Suit Claims
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Excessive Fees
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Billions of dollars given to FAMCO without a competitive bidding process
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Cost and Fees Inflated
Settlement / Conditions
$15.15MM settlement
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Implement maximizing returns strategy by keeping costs of investments low and enhance disclosures to participant regarding fees and expenses
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GD pay for recordkeeping fees in per-participant manner rather than asset, basis
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Credit plans for volume discounts from investment managers who provide services to other GD benefit plans
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FAMCO prohibited from recommending itself as investment manager or recommending the allocation of money to investment accounts it manages
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2. Steve Martin, Carol Tegard, and Allen Rose vs. Caterpillar Investment Management Ltd.
Class Action Suit Claims
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Including in plan certain mutual funds affiliated with Caterpillar
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Service providers to the Plans to receive excess compensation
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Failed to provide participants with complete and accurate info about the mutual funds affiliated with Caterpillar.
Settlement / Conditions
Caterpillar settled for $16.5MM |
3. Tibble et al (class action) vs. Edison International
Class Action Suit Claims
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Used retail funds (higher cost) rather than institutions funds.
Settlement / Conditions
Still in court |
4. Hagens Berman et al vs. Bank of America
Class Action Suit Claims
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Misled plan participants and shareholders about the impact of its December 2008 acquisition of Merrill Lynch. Caused BAC stock to plummet resulting in hundreds of millions of dollars lost in retirement funds
Settlement / Conditions
Still in court |
5. Phones Plus, Inc. vs. Hartford Life Insurance Company
Class Action Suit Claims
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Hartford breached fiduciary duty through by receiving revenue-sharing payments from mutual funds.
Settlement / Conditions
Hartford settled at $13.8MM |
6. Healthcare Strategies Inc. (TPA) vs. ING Life Insurance and Annuity Co.
Class Action Suit Claims
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TPA claims that ING received kickbacks from mutual funds through 12b-1 fees, service fees, and other revenue sharing payments.
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Claims that ING improperly profiled from the spreads on fixed accounts within annuities.
Settlement / Conditions
Still in court
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7. Barbara Fuller et al vs. SunTrust Banks
Class Action Suit Claims
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Charged fees several times higher than comparable funds
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Removed funds not affiliated with SunTrust due to "poor performance" but Suit says that the company didn't remove SunTrust-affiliated offers for poor returns.
Settlement / Conditions
Still in court |
8. Kanawai et al vs. Bechtel Corp
Class Action Suit Claims
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Failed to "use its size to get lower fees from vendors"
Settlement / Conditions
Settled: $1,571,102 plus $7,500 for each plaintiff named
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not to use its own affiliates as investment mngr
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enhance disclosure of admin fees
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no retail MFs
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no use of asset based admin fees
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conduct a competitive bidding process for TPAs
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9. Class Action Suit vs. CIGNA Corp
Class Action Suit Claims
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Procedural Prudence: fiduciary did not exercise due diligence in consideration of plan's compensation/revenue sharing arrangements
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Cause the plan to pay excessive compensation to services providers
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Fiduciaries violate ERISA due to lack of disclosure of fees to plan participants
Settlement / Conditions
Still in court |
10. Class Action Suit vs. Lockheed Martin
Class Action Suit Claims
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Procedural Prudence: fiduciary did not exercise due diligence in consideration of plan's compensation/revenue sharing arrangements
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Cause the plan to pay excessive compensation to services providers
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Fiduciaries violated ERISA due to lack of disclosure of fees to plan participants
Settlement / Conditions
Still in court |
