Franklin Templeton’s parent company is being sued by employees with 401(k) accounts who are accusing the investment manager of using its own funds in the retirement plan instead of better, cheaper funds.
The class-action suit, filed in the U.S. District Court for the Northern District of California on Thursday by Marlon H. Cryer, an investor in the plan, and others, alleges that Franklin Templeton’s retirement plan invested in funds offered and managed by the company, despite the fact that “better-performing and lower-cost funds were available.” The plaintiffs also accuse the fund group of investing in Franklin Funds to benefit its own investment management business.
“Despite the many investment options available in the market, the plan has invested hundreds of millions of dollars in mutual funds managed by Franklin Templeton and its subsidiaries,” the complaint explained. “These investment options were chosen because they were managed by, paid fees to, and generated profits for Franklin Templeton and its subsidiaries.”
For its part, “We are reviewing the complaint and do not have a comment at this time,” the San Mateo, California-based fund group said in a statement.
A number of asset managers are being hit with similar lawsuits by employees, such as New York Life Insurance Co. and American Century.