Self-Dealing Lawsuits Mount Against JP Morgan, Price, and Others
Fiduciary Self-Dealing Injures Employee/Plan Participants
Now, another participant in the JPMorgan Chase 401(k) Savings Plan has sued plan executives alleging that the plan favored JP Morgan investments over less-expensive investment options. That self-dealing, the complaint alleges, violates fiduciary duties under the Employee Retirement Income Security Act (“ERISA”). That was last month; this month T. Rowe Price, Black Rock, and others are feeling the same heat. Franklin Templeton, Neuberger Berman, Morgan Stanley, and American Century have also been sued. The cases are multiplying. All of them are potentially enormous class actions and could result in huge losses for defendants guilty of self-dealing.
What are the cases about? Really, the plan participants’ gripe is simple: rather than shop around for lower fee funds, plan trustees allowed 401(k) dollars to stay in the trustee’s own (or affiliates) funds. The executives had no incentive to shop around or, importantly, negotiate a lower fee. As they would have done if the funds were invested in unaffiliated bank’s funds – or if they were not executives of financial institutions (i.e., Whirlpool doesn’t have its own competing investment funds). Employee-retiree-participants argue this is a breach fiduciary duty under ERISA where the law says the beneficiaries’ interests come first. Keep in mind that the plan participants involved here are the defendant’s own employees and the funds are for the planned retirement of those employees. The defendants are huge employers, and the dollars at stake are enormous. Retirement dollars, earned by defendants’ own employees
For example, the 401(k) plan at issue in the JP Morgan cases manages over $21 billion. A 25% difference in a 1% plan management fee is $52 million. A year. Every year. Do the math. The T. Rowe Price numbers are big too. There, plaintiffs claim that their employer/plan administrator cost them $27 million. And growing. ERISA is an extremely complicated legislative scheme to police the administration of retirement money in the United States. The intent of ERISA was, and always has been, to protect retirement and other benefits from exploitation by employers and plan providers. Employers and providers are rightly held to the highest of fiduciary standards. The 401(k) self-dealing class actions show just how high the stakes are and how much money just a single provision in ERISA protects.
If you or a loved one has been a victim of securities fraud or has a question regarding your rights and plan fiduciary obligations under ERISA, contact the Evans Law Firm securities attorneys at (415) 441-8669, or by email at firstname.lastname@example.org. Our attorneys have experience with complicated securities and financial contract cases, fiduciary violations, and the actions of large insurance companies. We can help guide your case through a jury trial or toward an equitable settlement. We also handle cases involving physical and financial elder abuse, other types of qui tam and whistleblower cases, nursing home abuse, whole life insurance and universal life insurance, and indexed, variable, and fixed annuities.