The value paid out by plan sponsors over allegations of 401(k) plan mismanagement reached $146 million last year, according to news reports.
That’s up from $128 million in 2018, FA-IQ sister publication Ignites writes.
In all, more than a dozen plan sponsors reached settlements last year, about the same number as the prior year, according to Ignites. More than a third of the settlement value, however, was from just one suit, in which ABB agreed to pay $55 million to settle a class action suit that’s more than 10 years old, the publication writes.
Invesco, Oracle and Northrop Grumman reached settlements but haven’t yet publicized the amounts, according to Ignites. Among the nine companies that did disclose the settlement amounts last year, which include the Massachusetts Institute of Technology, SEI and Eaton Vance, the average payout was $10.1 million, compared to $10.6 million in 2018, the publication writes.
Over the course of 10 years, meanwhile, about 50 plan sponsors have settled for a total of more than $700 million over alleged Employee Retirement Income Security Act violations, according to Ignites. And the pace of new lawsuits isn’t slowing down, lawyers who litigate such cases tell the publication.
Not all allegations of 401(k) mismanagement end up in monetary settlements. In October, for example, a Manhattan federal court judge granted Morgan Stanley’s motion to dismiss a suit accusing the firm of stuffing its 401(k) with proprietary funds or underperforming funds form BlackRock.
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