Three employees have sued Xerox HR Solutions for violating ERISA by inflating fees in cohort with investment adviser Financial Engines.
Read the complaint here.
From Bloomberg BNA:
The lawsuit, filed Nov. 9 in federal court in Michigan, seeks class treatment for thousands of plan participants for which Xerox provided record-keeping services and for which FE served as investment adviser. The workers allege that Xerox HR violated the Employee Retirement Income Security Act by entering a “pay to play” scheme that wrongfully inflated the price of professional investment advice services that were critical to the successful management of the workers’ retirement savings.
Xerox HR contracted with FE to provide professional investment advice services to participants in the retirement plans serviced by Xerox HR through an agreement that dictated and controlled certain terms and conditions on which FE would provide its services.
Because FE was “interested” in securing an arrangement with Xerox to be the exclusive provider of investment advice to participants in plans administered by Xerox, it was “willing” to charge excessive fees to participants in order to meet Xerox’s demand for a kickback, the complaint said.
Xerox allegedly breached its fiduciary duties by requiring FE to charge excessive fees to plan participants. FE is paying Xerox over 30 percent of the fees it receives from the Ford plans, the complaint said.