ABB Ltd.'s U.S. unit and its retirement plan managers cost plan participants more than $35 million through breaches of fiduciary duty, a federal judge ruled.
ABB Inc., Cary N.C., and managers of its Personal Retirement Investment and Savings Management plans failed to control record-keeping fees and didn't pursue rebates, for which U.S. District Court Judge Nanette K. Laughrey in Kansas City, Mo., found them liable for $13.4 million.
They lost $21.8 million more by approving the transfer of assets from a Vanguard Group fund to a Fidelity Investments fund, Ms. Laughrey said in her 81-page March 31 ruling.
“The court finds that the plan must be compensated for its losses and any ill-gotten gains by defendants when they used plan assets for their own benefit,” Ms. Laughrey ruled, finding two Fidelity units liable for $1.7 million she called “lost float” interest earned on overnight transactions.
ABB Ltd. is a maker of power generation, transmission and distribution products, instrumentation and control systems. Its headquarters is in Zurich.
Its U.S. unit offered union and non-union workers comparable PRISM plans, matching 50% of participant contributions to the company's 401(k) plan up to as much as 6% of their annual pay, according to the court's ruling. The plans had $1.05 billion in total assets as of the end of 2010, according to ABB's latest Form 5500 filing.
“The PRISM plan was used by ABB to attract and retain employees,” Ms. Laughrey said. Fidelity Trust acted as its record keeper.
The group lawsuit was filed in December 2006 on behalf of a class of more than 12,800 participants, according to the complaint. It was tried before Ms. Laughrey without a jury in January 2010.
“Our executives are reviewing the decision,” ABB spokesman Barry Dillon said in a telephone interview. The company is “evaluating all options including the possibility of an appeal,” he said.
Fidelity's corporate media department didn't immediately reply to an after-hours e-mail request for comment.
