Waddell & Reed Financial has agreed to pay $4.875 million to settle claims by a participant in the company's 401(k) plan that plan managers violated their fiduciary duties by offering proprietary investments from affiliates of the company while not looking at other options.
The settlement also requires plan executives to hire an independent investment adviser for three years to work with the plan's administrative committee "to assist in making decisions about managing the plan and its investments," said a document filed Monday in federal District Court in Kansas City, Kan.
"Defendants admit no wrongdoing or liability with respect to any of the allegations or claims," said the settlement document in the case of Schapker vs. Waddell & Reed Financial Inc., et al. The class-action lawsuit, which requires court approval, covers 4,487 current and former participants in the Waddell & Reed Financial Inc. 401(k) and Thrift Plan.
In the June 2017 lawsuit, the 401(k) plan fiduciaries were accused of imprudently managing the plan "without considering alternative investments from other companies that were less expensive and (that) performed better in many cases," the settlement document said.
Waddell & Reed petitioned a federal District Court judge to dismiss the case in October 2017, but U.S. District Court Judge Julie A. Robinson denied the request in February. In August, the parties met with a mediator, and they subsequently agreed to the proposed settlement.
The class counsel is the Wichita, Kan.-based law firm Foulston Siefkin, whose payment, subject to court approval, will be capped at no more than one-third of the gross settlement amount, according to the settlement document.
The Waddell & Reed Financial Inc. 401(k) and Thrift Plan, Overland Park, Kan., had $223.7 million in assets as of Dec. 31, according to its latest Form 5500 filing.
