Lawsuits have been filed against New York University, MIT and Yale for alleged high-fee options in the schools’ 401(k) plans.
The three class-action suits, each filed by employees of the schools, allege breach of fiduciary duty for imprudent, high-priced investment options.
As of Thursday morning, Duke University was hit with a similar suit.
[Read the Duke complaint here.]
More from ai-cio.com:
Yale and NYU were accused specifically of causing plan participants to pay “excessive” administrative fees by using multiple record keepers, while simultaneously failing to “prudently consider or offer dramatically lower-cost investments that were available.”
The complaints also accused both plan sponsors of selecting and retaining a “large” number of duplicative investment options, “diluting” their ability to pay lower fees and “confusing participants”. They further “imprudently retained historically underperforming plan investments,” the plaintiffs argued.
MIT, meanwhile, was sued over its “extensive relationship” with Fidelity Investments, which plaintiffs said led to the university choosing the firm as its record keeper without conducting a “thorough, reasoned” search.
“Fidelity’s relationship with MIT, and the benefits MIT has derived from it, has secured Fidelity’s position as the plan’s record keeper without any competitive comparison from outside service providers,” the complaint stated, resulting in “unreasonable administrative, as well as investment management, expenses.”
The same law firm also hit Duke with a suit on Thursday morning.
More on the Duke suit, from NAPA:
Duke University, which has, in the most recent class action filing by the law firm of Schlichter, Bogard & Denton, been charged with a series of fiduciary breaches, including providing “…a dizzying array of duplicative funds in the same investment style,” relying on the services of four recordkeepers, carrying actively managed funds on its plan menu when passives were available, having recordkeeping charges that were asset-based, rather than per participant, and not using its status as a “jumbo” plan to negotiate a better deal for plan participants, among other things.
Photo by Joe Gratz via Flickr CC License