Participants in two Brown University 403(b) plans have sued the Providence, R.I.-based university, alleging the plans' managers breached their fiduciary duties under ERISA by paying "unreasonable and excessive fees" for investments and administrative services and offering too many duplicative investment choices.
The university "consistently selected and retained investment options for the plans that historically and consistently underperformed their benchmarks and charged excessive management fees," said the lawsuit filed July 6 in U.S. District Court in Providence by four participants. They are seeking class-action status.
In its management of the Brown University Deferred Vesting Retirement Plan and the Brown University Legacy Retirement Plan, the university failed to leverage its "substantial bargaining power to benefit participants and beneficiaries," said the lawsuit, Short et al. vs. Brown University.
The legacy plan had more than $1 billion in assets and the deferred vesting plan had assets of $244 million as of Dec. 31, 2015, according to the lawsuit.
Brown University is reviewing the complaint, Brian Clark, a university spokesman, said in an email Monday. "We are deeply committed to the well-being of our employees and approach our fiduciary responsibilities in sponsoring retirement plans with the utmost attentiveness," he wrote. "We have a strong case to make and will respond as appropriate through the legal process."
Among their criticisms of plan management, the participants argued the plans have too many investment options. As of Dec. 31, 2015, the complaint said both plans offered at least 35 investment options from TIAA-CREF and at least 26 options through Fidelity Investments, including "numerous duplicative fund choices."
The complaint was filed by three law firms: The Law Offices of Sonja Deyoe; Schneider Wallace Cottrell Konecky Wotkyns; and Berger & Montague.