A class action lawsuit against New York Life Insurance, claiming it breached its fiduciary duty to its own pension plans and illegally converted the plans assets, is expected to be filed today in U.S. District Court in Philadelphia.
The suit seeks hundreds of millions of dollars in damages claiming New York Life illegally used its retirement plans to establish its institutional mutual fund business by offering only its own MainStay line of institutional mutual funds in its two defined benefit plans with combined assets of $2.7 billion and two defined contribution plans with combined assets of about $1.6 billion, the complaint states. James A. Mehling, a former president and chief investment officer of Monitor Capital Advisors, a New York Life subsidiary, is the sole class member in the suit; he also contends the company illegally fired him to prevent him from blowing the whistle on the allegedly fraudulent scheme.
Company executives have said that Mr. Mehling is a disgruntled former employee. They added that the defined benefit plans are $900 million overfunded and that use of a financial services companys own mutual funds is permitted by an exemption to federal law.