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SEI sued over proprietary investment options in 401(k)

A former participant in the 401(k) plan of SEI Investments (SEIC) Co., Oaks, Pa., sued the company and plan fiduciaries, alleging that the plan's almost exclusive reliance on proprietary investment options was a breach of their duties under ERISA.

The participant faulted the fiduciaries for "imprudently selecting and monitoring the plans investment options and by retaining affiliated investment products in the plan where doing so was not warranted by their merits relative to non-proprietary alternatives," in a Sept. 28 complaint filed with the U.S. District Court in Philadelphia. The complaint, Stevens vs. SEI Investments Co. et al, seeks class-action status.

"Defendants failed to employ a prudent and loyal process for selecting, monitoring and reviewing the plan's designated investment alternatives," the complaint said, noting that 12 of the 13 investment options as well as a target-date series were proprietary SEI products. In the case of the PIMCO Stable Income Fund, the complaint said SEI "is a partner in the management of the fund and receives fees from the fund."

The SEI fiduciaries violated Employee Retirement Income Security Act rules "by prioritizing SEI's proprietary investments over superior available options," the complaint said. SEI fiduciaries also were blamed for "failing to objectively evaluate the expected performance and fees of the plan's investments in comparison to other investment options."

SEI spokeswoman Leslie Wojcik wrote in an email Tuesday that "as a matter of longstanding policy and practice, we do not comment on pending litigation."

The SEI Capital Accumulation Plan had $514.3 million in assets as of Dec. 31, 2017, according to the latest Form 5500 filing.