ST. LOUIS, Mo.--(BUSINESS WIRE)--Schlichter, Bogard & Denton, a leading national law firm based in St. Louis, today filed separate class action lawsuits against three universities on behalf of over 60,000 employees in their defined contribution retirement plans.
The complaints, David B. Tracey, et al., v. Massachusetts Institute of Technology, et al.; Dr. Alan Sacerdote, et al., v. New York University, et al.; and Joseph Vellali, et al., v. Yale University, et. al., were filed in the U.S. District Courts of Massachusetts, the Southern District of New York, and the District of Connecticut, respectively.
“We contend that these universities, as fiduciaries, have breached their duties under the law to protect the retirement assets of their employees and retirees,” Jerry Schlichter of Schlichter, Bogard & Denton, the attorney for the plaintiffs stated. “These university employees deserve the same right to build meaningful retirement assets as employees of for-profit companies,” Mr. Schlichter added.
Common to all three complaints are allegations that each of these universities, as employee retirement plan sponsors, breached their duties of loyalty and prudence under the Employee Retirement Income Security Act (ERISA) by causing plan participants to pay millions of dollars in unreasonable and excessive fees for recordkeeping, administrative, and investment services of the plans.
The complaints further allege that the universities breached their fiduciary duties by selecting and retaining numerous high-cost and poor performing investment options compared to available alternatives, which substantially reduced the retirement assets of the employees and retirees.
In the cases of New York University and Yale University, both 403(b) type plans, the complaints allege employees paid excessive recordkeeping fees in addition to selecting and imprudently retaining funds which historically underperformed for years.
The complaints also state that in contrast to actions by prudent fiduciaries of other similarly sized defined contribution plans, these universities each used multiple recordkeepers, rather than a single recordkeeper. Consequently, by using multiple recordkeepers, the universities caused plan participants to pay duplicative, excessive, and unreasonable fees for plan recordkeeping services.
In the case of Massachusetts Institute of Technology, a 401(k) plan, the complaint alleges that MIT’s close relationship with Fidelity Investments led to its selection as plan recordkeeper, without any competitive bidding process in violation of the university’s duty to act in the exclusive interest of its employees and retirees according to the complaint, Abigail Johnson has been a member of the MIT Board of Trustees for years and is also CEO of Fidelity, which her family controls. It also alleges that MIT placed over 150 Fidelity funds, including high priced retail funds in the plan, in spite of the plan being a $3.5 billion plan able to command lower fees. This has caused participants to pay unreasonable administrative and investment management expenses.
“The universities do not have high priced retail mutual funds in their multi-billion dollar endowments, yet they have them in their employees’ retirement plans, resulting in the employees paying excessive fees and diminishing their retirement savings,” added Mr. Schlichter.
Schlichter, Bogard & Denton, based in St. Louis, MO, pioneered excessive fee 401(k) litigation on behalf of employees and retirees and to seek remedies. Since 2006, the firm has filed 20 such complaints and secured 9 settlements on behalf of employees. In 2009, the firm won the only full trial of an 401(k) excessive fee case against ABB. The firm’s Tibble v. Edison is the first and only 401(k) excessive fee case to be argued in the Supreme Court. On May 18, 2015, the firm won a landmark unanimous 9-0 decision in which both the AARP and the Solicitor General wrote supporting briefs for the employees.
Jerry Schlichter and his firm have been referred to by federal judges as “preeminent “in the field of 401(k) fee litigation; as demonstrating “extraordinary skill and determination”; as making “a significant, national contribution,” having “educated plan administrators, the Department of Labor, <and> the courts” about fees and fiduciary obligations; and has been referred to by federal judges as a “private attorney general,” causing fees to come down in the entire 401(k) industry.
About Schlichter, Bogard & Denton, LLP
Schlichter, Bogard & Denton, LLP, of St. Louis is a national law firm that represents individuals, including victims of financial abuse and 401(k) plan investors, whose plans suffer from excessive fees or imprudent investment options. Its attorneys are dedicated to helping financial abuse victims, and helping employees and retirees secure the retirement benefits they deserve.
More information can be found at:
http://www.uselaws.com or call (800)-USE-LAWS (873-5297)
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