Employees suing New York Life Insurance filed a motion asking a U.S. District Court judge in Philadelphia to add amended RICO allegations to their complaint, based on assertions that the company used its own retail-priced mutual funds in its two 401(k) plans with $4 billion in combined assets and two defined benefit plans with a combined $2.8 billion in assets.
The motion also contends that New York Life "admitted” that investing pension assets in mutual funds was wrong by withdrawing $1.8 billion in defined benefit assets from Eclipse Funds, its proprietary mutual funds.
George Trapp, New York Life’s executive vice president, called the allegations "absolutely false” and said under Judge Bruce W. Kaufman’s March ruling striking plaintiffs’ RICO claims, a plan sponsor is allowed to used its own mutual funds in its pension plans. New York Life on April 1 moved the money into bank-managed separate accounts run by the same money managers who ran the mutual funds as a result of an asset allocation review begun in mid-1999, Mr. Trapp said.
