Skip to main content
MENU
Subscribe
  • Sign Up Free
  • LOGIN
  • Subscribe
  • Topics
    • Alternatives
    • Consultants
    • Coronavirus
    • Courts
    • Defined Contribution
    • ESG
    • ETFs
    • Face to Face
    • Hedge Funds
    • Industry Voices
    • Investing
    • Money Management
    • Opinion
    • Partner Content
    • Pension Funds
    • Private Equity
    • Real Estate
    • Russia-Ukraine War
    • SECURE 2.0
    • Special Reports
    • White Papers
  • Rankings & Awards
    • 1,000 Largest Retirement Plans
    • Top-Performing Managers
    • Largest Money Managers
    • DC Money Managers
    • DC Record Keepers
    • Largest Hedge Fund Managers
    • World's Largest Retirement Funds
    • Best Places to Work in Money Management
    • Excellence & Innovation Awards
    • WPS Innovation Awards
    • Eddy Awards
  • ETFs
    • Latest ETF News
    • Fund Screener
    • Education Center
    • Equities
    • Fixed Income
    • Commodities
    • Actively Managed
    • Alternatives
    • ESG Rated
  • ESG
    • Latest ESG News
    • The Institutional Investor’s Guide to ESG Investing
    • ESG Sustainability - Gaining Momentum
    • Climate Change: The Inescapable Opportunity
    • Impact Investing
    • 2022 ESG Investing Conference
    • ESG Rated ETFs
  • Defined Contribution
    • Latest DC News
    • DC Money Manager Rankings
    • DC Record Keeper Rankings
    • Innovations in DC
    • Trends in DC: Focus on Retirement Income
    • 2022 Defined Contribution East Conference
    • 2022 DC Investment Lineup Conference
  • Searches & Hires
    • Latest Searches & Hires News
    • Searches & Hires Database
    • RFPs
  • Performance Data
    • P&I Research Center
    • Earnings Tracker
    • Endowment Returns Tracker
    • Corporate Pension Contribution Tracker
    • Pension Fund Returns Tracker
    • Pension Risk Transfer Database
    • Future of Investments Research Series
    • Charts & Infographics
    • Polls
  • Careers
  • Events
    • View All Conferences
    • View All Webinars
    • 2023 Defined Contribution East
    • 2023 ESG Investing
Breadcrumb
  1. Home
  2. DEFINED CONTRIBUTION
August 09, 2016 01:00 AM

MIT, Yale and NYU sued over charging excessive DC plan fees

James Comtois
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print
    Andrew Harrer/Bloomberg

    Three class-action lawsuits have been filed against Massachusetts Institute of Technology, New York University and Yale University for excessive defined contribution retirement plan fees.

    The law firm Schlichter Bogard & Denton on Tuesday filed separate class-action lawsuits against the three universities in the U.S. District Courts in Boston, New York and Hartford, Conn., respectively. The suits have been filed on behalf of more than 60,000 plan participants.

    “We contend that these universities, as fiduciaries, have breached their duties under the law to protect the retirement assets of their employees and retirees,” Jerry Schlichter, founding and managing partner of Schlichter Bogard & Denton, said in a news release issued by the law firm.

    Common to all three complaints are allegations that each university, as an employee retirement plan sponsor, breached its duties of loyalty and prudence under the Employee Retirement Income Security Act by causing plan participants to pay millions of dollars in unreasonable and excessive fees for record-keeping, administrative and investment services of the plans.

    The complaints further allege the universities breached their fiduciary duties by selecting and retaining numerous high-cost and poor-performing investment options compared to available alternatives, which substantially reduced the retirement assets of the active participants and retirees.

    In the case of MIT, a 401(k) plan based in Cambridge, Mass., the complaint alleges MIT's close relationship with Fidelity Investments led to Fidelity's selection as plan record keeper, without any competitive bidding process in violation of the university's duty to act in the exclusive interest of its employees and retirees. Abigail Johnson has been a member of the MIT board of trustees for years and is also CEO of Fidelity, which her family controls. Fidelity is not a defendant in the lawsuit.

    It also alleges MIT placed more than 150 Fidelity funds, including high-priced retail funds, in the $3.5 billion plan, despite being a big enough plan to be able to command lower fees. This has allegedly caused participants to pay unreasonable administrative and investment management expenses.

    In the cases of NYU and Yale, both 403(b) type plans, based in New York and New Haven, Conn., respectively, the complaints allege employees paid excessive record-keeping fees in addition to selecting and imprudently retaining funds that historically underperformed for years.

    The complaints also state that in contrast to actions by prudent fiduciaries of other similarly sized defined contribution plans, these universities each used multiple record keepers, rather than a sole provider. Consequently, by using multiple record keepers, the universities caused plan participants to pay duplicative, excessive and unreasonable fees for plan record-keeping services, the complaint said.

    “NYU only first saw the papers this morning, so we cannot comment at length. But it seems worth noting that, first, decisions about our retirement choices are influenced by feedback from our faculty and other employees, and second, that the named plaintiffs in this case notably include several faculty members who recently lost unrelated court cases they brought against NYU,” NYU spokesman John Beckman said in an e-mail.

    Mr. Beckman added: “NYU takes seriously the welfare of our faculty and employees — very much including a dignified retirement — and the retirement plans offered to them are chosen and administered carefully and prudently. We will litigate this case vigorously and expect to prevail.”

    MIT spokeswoman Kimberly Allen declined to comment, while Yale spokesman Tom Conroy could not be immediately reached for comment by press time.

    Yale's plan has about $3 billion in assets, while NYU's plan has about $1 billion.

    Related Articles
    New York Life sued by employees claiming excessive 401(k) fees
    Neuberger Berman sued for excessive 401(k) fees
    4 more top universities targeted for fiduciary breaches in 403(b) plan manageme…
    Emory University DC plans latest to face fiduciary-breach suit
    Columbia becomes latest university sued over 403(b) plan management
    MIT's endowment returns 0.8% for fiscal year
    More plans embrace open architecture
    Ford participants sue Xerox over alleged 'pay-to-play' scheme with Financial En…
    University of Pennsylvania wins retirement plan suit
    Recommended for You
    ONLINE_170809948_AR_-1_TIYUNLNPIEDC.jpg
    DC rollovers fuel IRA growth to $13.9 trillion, largest part of retirement market
    retirement income senior desk money_1550-main_i.jpg
    Non-qualified deferred compensation plans used to draw top talent, survey says
    Microsoft_Logo_i.jpg
    Microsoft to trim workforce, citing macroeconomic conditions
    Research for Institutional Money Management
    Sponsored Content: Research for Institutional Money Management

    Reader Poll

    January 25, 2023
    SEE MORE POLLS >
    Sponsored
    White Papers
    The Future of Infrastructure: Building a Better Tomorrow
    Fulcrum Issues: Equity Returns and Inflation — Choose Your Own Adventure
    What Matters Most in Considering a Private Debt Strategy
    Why pursue direct lending in the core middle market?
    Research for Institutional Money Management
    Are Factors a Thing of the Past?
    View More
    Sponsored Content
    Partner Content
    The Industrialization of ESG Investment
    For institutional investors, ETFs can make meeting liquidity needs easier
    Gold: the most effective commodity investment
    2021 Investment Outlook | Investing Beyond the Pandemic: A Reset for Portfolios
    Ten ways retirement plan professionals add value to plan sponsors
    Gold: an efficient hedge
    View More
    E-MAIL NEWSLETTERS

    Sign up and get the best of News delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    Subscribe Today
    December 12, 2022 page one

    Get access to the news, research and analysis of events affecting the retirement and institutional money management businesses from a worldwide network of reporters and editors.

    Subscribe
    Connect With Us
    • RSS
    • Twitter
    • Facebook
    • LinkedIn

    Our Mission

    To consistently deliver news, research and analysis to the executives who manage the flow of funds in the institutional investment market.

    About Us

    Main Office
    685 Third Avenue
    Tenth Floor
    New York, NY 10017-4036

    Chicago Office
    130 E. Randolph St.
    Suite 3200
    Chicago, IL 60601

    Contact Us

    Careers at Crain

    About Pensions & Investments

     

    Advertising
    • Media Kit
    • P&I Content Solutions
    • P&I Careers | Post a Job
    • Reprints & Permissions
    Resources
    • Subscribe
    • Newsletters
    • FAQ
    • P&I Research Center
    • Site map
    • Staff Directory
    Legal
    • Privacy Policy
    • Terms and Conditions
    • Privacy Request
    Pensions & Investments
    Copyright © 1996-2023. Crain Communications, Inc. All Rights Reserved.
    • Topics
      • Alternatives
      • Consultants
      • Coronavirus
      • Courts
      • Defined Contribution
      • ESG
      • ETFs
      • Face to Face
      • Hedge Funds
      • Industry Voices
      • Investing
      • Money Management
      • Opinion
      • Partner Content
      • Pension Funds
      • Private Equity
      • Real Estate
      • Russia-Ukraine War
      • SECURE 2.0
      • Special Reports
      • White Papers
    • Rankings & Awards
      • 1,000 Largest Retirement Plans
      • Top-Performing Managers
      • Largest Money Managers
      • DC Money Managers
      • DC Record Keepers
      • Largest Hedge Fund Managers
      • World's Largest Retirement Funds
      • Best Places to Work in Money Management
      • Excellence & Innovation Awards
      • WPS Innovation Awards
      • Eddy Awards
    • ETFs
      • Latest ETF News
      • Fund Screener
      • Education Center
      • Equities
      • Fixed Income
      • Commodities
      • Actively Managed
      • Alternatives
      • ESG Rated
    • ESG
      • Latest ESG News
      • The Institutional Investor’s Guide to ESG Investing
      • ESG Sustainability - Gaining Momentum
      • Climate Change: The Inescapable Opportunity
      • Impact Investing
      • 2022 ESG Investing Conference
      • ESG Rated ETFs
    • Defined Contribution
      • Latest DC News
      • DC Money Manager Rankings
      • DC Record Keeper Rankings
      • Innovations in DC
      • Trends in DC: Focus on Retirement Income
      • 2022 Defined Contribution East Conference
      • 2022 DC Investment Lineup Conference
    • Searches & Hires
      • Latest Searches & Hires News
      • Searches & Hires Database
      • RFPs
    • Performance Data
      • P&I Research Center
      • Earnings Tracker
      • Endowment Returns Tracker
      • Corporate Pension Contribution Tracker
      • Pension Fund Returns Tracker
      • Pension Risk Transfer Database
      • Future of Investments Research Series
      • Charts & Infographics
      • Polls
    • Careers
    • Events
      • View All Conferences
      • View All Webinars
      • 2023 Defined Contribution East
      • 2023 ESG Investing