Fidelity Faces Another 401(k) Plan Suit
Fidelity Investments is facing a lawsuit accusing the firm of using its own proprietary mutual funds to benefit the firm and its affiliates at the expense of participants in its own 401(k) plan, InvestmentNews writes.
The suit, filed in the U.S. District Court for the District of Massachusetts, accuses Fidelity of breaching its fiduciary duty, according to the publication.
The plaintiffs say in the suit that the company’s actions were "particularly inexcusable" given that it’s the largest recordkeeper of defined-contribution plans — and that it faced a similar suit not too long ago, InvestmentNews writes. Fidelity settled that suit for $12 million in 2014, according to the publication.
The current suit alleges the firm had 234 proprietary mutual funds in its plan in 2016 — more than it had in the two years prior — and no non-proprietary funds, InvestmentNews writes.
The plaintiffs allege that high fund fees combined with poor performance caused more than $100 million in annual losses in the plan compared to the average 401(k) plan, according to the publication.
A Fidelity spokesman tells InvestmentNews the firm "strongly disputes the allegations” and plans to “vigorously defend” itself.