Participants in a 401(k) plan of Deutsche Bank Americas Holding Corp. reached a tentative settlement with the company and plan fiduciaries leading to a $21.9 million payment to settle allegations of fiduciary breaches.
The participants filed a settlement memorandum Tuesday in U.S. District Court in New York, noting that the agreement also calls for several actions by Deutsche Bank to address allegations in the class-action complaint that was initially filed in 2015 and subsequently amended several times.
The defendants have agreed "to delegate all decisions regarding proprietary investments to an independent fiduciary," who will be appointed, according to the memorandum of the preliminary settlement.
In addition, the proposed settlement said Deutsche Bank "will seek guidance from the independent fiduciary regarding whether any of the mutual funds in the plan should be replaced with alternative investment vehicles such as separate accounts or collective trusts."
The settlement requires court approval as does the request by plaintiffs' lawyers from the firm of Nichols Kaster LLP for fees. The attorney fees will come from the $21.9 million and will be capped at 30%, the document said.
Plaintiffs claimed the plan fiduciaries violated their ERISA obligations by retaining Deutsche Bank-affiliated investment products in the 401(k) plan "that a prudent and unbiased fiduciary would not have retained," the document said. They alleged that the fiduciaries "failed to give appropriate consideration" to offering separate accounts or collective trusts.
An amended complaint filed in January 2017 added Aon Hewitt Investment Consulting as a defendant. Two months later, Aon Hewitt was dismissed as a defendant.
The document said both parties began mediation in April 2018 as a trial date of July 9 approached. They reached a settlement in principle on the day before the trial.
The Deutsche Bank Matched Savings Plan had $3 billion in assets as of year-end 2016, according to the latest Form 5500 filing.
“Deutsche Bank is pleased to have resolved this matter,” the company said in a statement. “By settling this litigation, Deutsche Bank does not admit any of the allegations in this case. Deutsche Bank continues to believe that the claims in this case have no merit, and chose to settle to avoid the distraction of a trial and to mitigate the risk of an arbitrary result.”