Plaintiffs in a class-action fiduciary lawsuit against Vanderbilt University have added an amended complaint related to the use of participant data to market services to them.
The lawsuit is one of a number originally filed in 2016 against universities for breaching their fiduciary duties in the management of 403(b) plans, charging they failed to use their bargaining power to prevent excessive fees for record-keeping, investment and administrative services. At the time the original lawsuit was filed, Vanderbilt's 403(b) plan used four record keepers that offered a total of 340 investment options.
The amended complaint is regarding "failure to protect plan assets by allowing third parties to market services to participants," according to a May 9 memorandum in favor of the amended complaint. The amended complaint was approved in part on June 1 by Judge Joe B. Brown of U.S. District Court in Nashville, who said plaintiffs needed to omit portions previously dismissed by the court.
According to the Wednesday filing of the amended complaint, Vanderbilt breached its fiduciary duty "by allowing TIAA to use its position as the plan's record keeper to obtain access to participants, gaining valuable, private and sensitive information including participants' contact information, their choices of investments, the asset size of their accounts, their employment status, age and proximity to retirement, among other things" and used the data "to sell TIAA products and wealth management services to the plan's participants, and failed to even attempt to determine the value of this marketing benefit."
Jerome Schlichter, senior partner at Schlichter, Bogard and Denton, attorney for the plaintiffs, said in a telephone interview: "Vanderbilt allowed TIAA to use its access to confidential sensitive financial information about participants to benefit itself by selling insurance and other products outside the plan. We also allege that not only was this improper but that Vanderbilt violated its duty to work for the exclusive benefit of plan participants rather than TIAA's benefit."
The lawsuit is scheduled to go to trial on Nov. 5, 2019.
As of Dec. 31, 2016, Vanderbilt's two 403(b) plans had about $3.5 billion in total assets, according to the university's most recent Form 5500 filings.
Vanderbilt spokeswoman Annmarie Owens could not immediately provide comment.