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Courts

DC participant sues Invesco for stuffing 401(k) lineup with proprietary funds

A participant in the Invesco (IVZ) 401(k) Plan, Atlanta, has sued the corporate parent, several affiliates and plan fiduciaries, alleging violations of the Employee Retirement Income Security Act because the plan's investment lineup contained an overwhelming majority of Invesco's and affiliates' products.

"Defendants put their interests before the plan participants by treating the plan as an opportunity to promote and generate fees from proprietary investment products offered by Invesco and its subsidiaries," said the complaint filed May 24 in U.S. District Court in Atlanta. "Many of the plan's investment options performed worse and/or had higher fees than other comparable unaffiliated investment options."

Funds from Invesco and subsidiaries accounted for 93% to 95% of the investment lineup each year from 2012 through 2016, according to the complaint.

"Rather than evaluating and selecting the plan's investment options through a careful and prudent process serving the best interests of plan participants, defendants indiscriminately placed mostly Invesco-affiliated investment products in the plan," said the complaint in Cervantes vs. Invesco Holding Co. et al. The complaint seeks class-action status.

The plaintiff also argued that the Invesco plan had too many options, ranging from 153 to 207 between 2012 and 2016. The defendants "failed to limit the huge number of offerings to a manageable amount," the complaint said. "The sheer number of investment options rendered it virtually impossible for the typical participant to adequately understand" the investment lineup.

The plan had $891 million in assets as of Dec. 31, 2016, according to its latest Form 5500 filing.

Jeaneen Terrio, a company spokeswoman, didn't respond to a request for comment.