July 20, 2009

ERISA Litigation

We ran across an interesting report in InvestmentNews on a lawsuit against the service providers--investment advisor, recordkeeper, and custodian--to a $2 million 401(k) plan in Kansas. To this point, of course, most 401(k) litigation has focused on the biggest plans. Here's IN's Mark Bruno:

A group of fewer than 30 employees at a small company in Kansas has filed a lawsuit against the investment adviser, record keeper and custodian for its $2 million 401(k) plan, alleging that the trio of plan providers caused participants to pay "secret" and "excessive" fees.

The claim itself is a familiar one, of course, as more than a dozen Fortune 500 companies that boast billions in their 401(k) plans have been hit with similar suits in the past four years.

However, experts said, this latest suit represents the first time that participants have taken aim at such a small plan--and an investment adviser.

They also suggested that this could just be the beginning of a potential wave of litigation in the small-plan market, one that could put a bull's-eye on investment advisers and service providers that typically supply most of these plans.

In the age of LaRue v. DeWolff, sponsors and service providers need to get serious about their fiduciary duties to plans of all sizes and shapes.

Source

Mark Bruno, "Employees name investment adviser in 401(k) suit," InvestmentNews, July 19, 2009

Jul 20, 2009 7:35:11 AM | Public Policy, Retirement Plans

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