Skip to main content
MENU
Subscribe
  • Subscribe
  • Account
  • LOGIN
  • Topics
    • Alternatives
    • Consultants
    • Coronavirus
    • Courts
    • Defined Contribution
    • ESG
    • ETFs
    • Hedge Funds
    • Industry Voices
    • Investing
    • Money Management
    • Opinion
    • Partner Content
    • Pension Funds
    • Private Equity
    • Real Estate
    • Russia-Ukraine War
    • SECURE Act 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
    • 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
    • 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
    • 2022 Innovation Investing Conference
    • 2022 Defined Contribution East Conference
    • 2022 ESG Investing Conference
    • 2022 DC Investment Lineup Conference
    • 2022 Alternatives Investing Conference
Breadcrumb
  1. Home
  2. COURTS
June 20, 2017 01:00 AM

Putnam, Fidelity win respective 401(k) lawsuits

The legal victories come as asset managers are under fire for their dealings with retirement plans

Greg Iacurci
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print

    Putnam Investments and Fidelity Investments have prevailed in separate legal fights centering on their fiduciary duty to retirement plans, at a time when financial services companies are increasingly being targeted for 401(k) self-dealing.

    A federal judge shot down plaintiffs' arguments that Putnam breached its fiduciary duty to its own 401(k) plan participants by "stuffing" the plan with Putnam-affiliated investment funds, without regard to cost, performance or other metrics.

    The claims over using in-house funds are similar to those filed in recent lawsuits against such asset managers as Capital Group, BlackRock, J.P. Morgan Chase, Franklin Templeton Investments and American Century Investments.

    Some, such as New York Life and TIAA-CREF, settled, for $3 million and $5 million, respectively. But Wells Fargo & Co. last month won its case regarding use of proprietary target-date funds in its company 401(k), which some saw as an "atypical" outcome.

    In the Putnam lawsuit, Judge William G. Young of the District of Massachusetts said plaintiffs had "failed to point to specific circumstances" in which the firm put its interests ahead of plan participants'.

    "Pointing to self-dealing alone is insufficient for the plaintiffs to meet their burden of persuasion to show by a preponderance of the evidence a breach of the fiduciary duty of loyalty, particularly where the practices are common within the industry," Mr. Young said in the order, filed Monday.

    The judge also called plaintiffs' contention that Putnam lacked an objective process to monitor plan investments, thereby making the entire plan lineup imprudent, a "non sequitur."

    "Indeed, a person could lack an independent process to monitor his investment and still end up with prudent investments, even if it was the result of sheer luck," Mr. Young said.

    The judge had earlier sided with Putnam on two counts, and is now striking down the remaining counts following a bench trial that began April 7. The case, Brotherston et al. vs. Putnam Investment, LLC et al., was originally filed in November 2015.

    The Fidelity lawsuit, Ellis et al. vs. Fidelity Management Trust Co., concerned the firm's alleged mismanagement of a stable value fund.

    Plaintiffs claimed the fund's low investment returns and high fees made it an imprudent investment for 401(k) plan participants.

    Mr. Young, who also heard the Putnam lawsuit, disagreed with plaintiffs, saying in an order filed Monday that they failed to carry their burden of proof.

    The lawsuit was originally filed in December 2015 in Massachusetts district court.

    Related Articles
    Edward Jones hit with second lawsuit over excessive 401(k) fees
    J.P. Morgan sued for self-dealing in its 401(k) plan
    Lawsuit accuses T. Rowe Price of self-dealing in company 401(k) plan
    BlackRock accused in lawsuit of self-dealing in 401(k) plan
    Capital Group sued for self-dealing in its 401(k) plan
    Voya's win in 401(k) fee suit involving Financial Engines bodes well for other …
    Waddell & Reed sued over favoring its own investment options in 401(k) plan
    MFS Investment Management sued over claims of self-dealing in 401(k) plans
    J.P. Morgan settles lawsuit on alleged fiduciary breach in stable value funds
    Capital Group, sponsor of American Funds, wins 401(k) lawsuit
    Recommended for You
    ONLINE_180209828_AR_0_FRAQWKTPAVZW.jpg
    New York sues Albany Diocese over unpaid pension benefits
    ONLINE_190109864_AR_0_SLHVICTSVYPI.jpg
    Former Molina Healthcare employees sue NFP Retirement alleging ERISA violations
    SEClogobig-main.jpg
    Appeals court rules against SEC on administrative law judge proceeding
    OCIO, Anchor in Rough Seas
    Sponsored Content: OCIO, Anchor in Rough Seas

    Reader Poll

    May 23, 2022
    SEE MORE POLLS >
    Sponsored
    White Papers
    Crossroads: Politics, Inflation, & Bonds
    Credit Indices: Closing the Fixed Income Evolutionary Gap
    Forever in Style: Benchmarking with the Morningstar® Broad Style Indexes℠
    Q2 2022 Credit Outlook: Carry On
    Leverage does not equal risk
    Is there a mid-cap gap in your DC plan?
    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
    May 23, 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 © 1996-2022. Crain Communications, Inc. All Rights Reserved.
    • Topics
      • Alternatives
      • Consultants
      • Coronavirus
      • Courts
      • Defined Contribution
      • ESG
      • ETFs
      • Hedge Funds
      • Industry Voices
      • Investing
      • Money Management
      • Opinion
      • Partner Content
      • Pension Funds
      • Private Equity
      • Real Estate
      • Russia-Ukraine War
      • SECURE Act 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
      • 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
      • 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
      • 2022 Innovation Investing Conference
      • 2022 Defined Contribution East Conference
      • 2022 ESG Investing Conference
      • 2022 DC Investment Lineup Conference
      • 2022 Alternatives Investing Conference