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Lowe’s, Aon Hewitt sued for fiduciary breach over 401(k) losses in Hewitt Growth Fund

A class-action lawsuit was filed on April 27 against Lowe's Cos. Inc., Wilkesboro, N.C., and its investment consultant Aon Hewitt Investment Consulting alleging fiduciary breaches in its 401(k) plan.

The ERISA lawsuit, filed in U.S. District Court in Charlotte, N.C., alleges the company breached its fiduciary duty in offering an underperforming investment option in the plan beginning in 2015.

The lawsuit alleges that the option, the Hewitt Growth Fund, was a risky investment option to include in the plan because there were very few other plans that offered the collective investment trust. According to the court filing, it "was included in only two other retirement plans in the entire country."

"(Aon) Hewitt had a conflict of interest in recommending this proprietary fund for the plan, and improperly did so to further its own financial interests instead of the interests of the plan's participants," the lawsuit said.

According to the company's 2015 Form 5500 filing, as of Dec. 31 of that year, the Hewitt Growth Fund had $1.074 billion in assets out of the plan's total $5.45 billion in assets, and the court filing said "the total amount invested by all other investors in this fund at year-end 2015 was only about $350 million combined."

The filing alleges that the Hewitt Growth Fund "performed so poorly that the plan already has suffered over $100 million in investment losses based on a comparison of the returns of the (fund) to the eight funds it replaced."

As of Dec. 31, 2016, the Lowe's plan had $1.082 billion in assets invested in the fund, according to the company's most recent Form 5500 filing, up 0.7% from the previous year. As of that same date, the plan had $5.27 billion in assets.

The lawsuit seeks to recover the $100 million in losses it alleges and "disgorge the profits that Hewitt received on account of its disloyal conduct, prevent further mismanagement of the plan and obtain other appropriate relief."

Paul Lukas, attorney at Nichols Kaster, attorney for the plaintiffs, and Valerie Williams, Lowe's spokeswoman, could not be immediately reached to provide comment. Aon Hewitt spokeswoman Maurissa Kanter said the company does not comment on pending litigation.