Close Close
Sign In
Newsletters
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards
Podcast Center Video Center Webcasts Resource Center Events
About ThinkAdvisor Contact Us Advertise With Us Asset & Logo Licensing Sitemap Terms of Service Privacy Policy Copyright © 2024 ALM Global, LLC. All Rights Reserved.
ThinkAdvisor

Life Health > Life Insurance

Fidelity hit with another 401(k) lawsuit

By Dan Berman

X
Your article was successfully shared with the contacts you provided.

Fidelity Investments is facing a new lawsuit by its employees claiming breach of fiduciary duty in managing the company’s in-house 401(k) plan.

The class action suit, filed this week in U.S. District Court in Massachusetts, alleges the Boston-based company did not seek to recapture excess revenue-sharing money held to cover recordkeeping expenses.

A lawsuit filed last March made similar claims, which Fidelity has denied. That suit caused industry observers to say asset managers should make sure they are not breaking any of their fiduciary duties.

Such lawsuits have become more common over the last few years, with more than 30 filed against plan sponsors.

The new suit claims the recordkeeping fees paid by the plan to Fidelity’s own mutual fund lineup far exceeded what was reasonable. Dating back to 2007, the suit says the fees were excessive because Fidelity did not have an arm’s length relationship with its recordkeepers. Many large plans, the suit said, negotiate hard fees.

For instance, the suit says, if a reasonable recordkeeping fee equaled $10 per participant, any amount paid above that would be returned. Fidelity’s plan has about 55,000 participants and $8 billion in assets. The lawsuit says fees paid should have equaled $550,000 per year. In fact, the plan paid $15 million for each year.

The suit also claims Fidelity did not disclose the fees to plan participants.

A Fidelity spokesman, reached by email, issued a statement.

“While it’s not appropriate for us to comment on pending litigation, it is well known in the industry that Fidelity offers a very attractive benefits package including a 401(k) plan that matches eligible employee contributions to the plan, dollar for dollar, up to 7 percent of each eligible participant’s compensation – a level of match enjoyed by only approximately 2 percent of 401(k) plan participants nationwide,” said Vincent Loporchio, a Fidelity spokesman. 

See also:

NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.