BB&T Corp., Winston-Salem, N.C., agreed to pay $24 million to settle claims by current and former participants of the company's 401(k) plan who alleged plan officials breached their fiduciary duties by charging "unreasonable" investment management fees, favoring high-cost proprietary investment options over other investments and selecting and retaining underperforming investments.
The preliminary settlement agreement, which must be approved by a U.S. District Court judge, was filed Nov. 30 in Greensboro, N.C., by plaintiffs' lead counsel, Jerome Schlichter, founder and managing partner of Schlichter Bogard & Denton. Some plaintiffs in this class-action suit were represented by the Minneapolis law firm of Nichols Kaster.
"BB&T defendants dispute these allegations and deny liability for any alleged fiduciary breaches or ERISA violations," the settlement document said.
In addition to the payment to participants, the settlement agreement calls for several non-monetary remedies. For example, BB&T fiduciaries must hire a consulting firm to issue an RFP to hire an investment consultant that is unaffiliated with BB&T. The investment consultant "will evaluate the plan's investment options and provide the plan fiduciaries with an objective evaluation of the options," the document said.
The agreement also said plan fiduciaries must participate in an ERISA training session within two years of the settlement being approved.
The plaintiffs had argued BB&T fiduciaries received "excessive" administrative fees through "uncapped and unrebated revenue sharing," the document said. They also alleged the defendants "breached their duties to appropriately monitor and remedy breaches of other plan fiduciaries," the document said.
If approved by the court, the settlement would conclude a lawsuit that was filed in September 2015.
The BB&T Corporation 401(K) Savings Plan had $4.63 billion in assets as of Dec. 31, 2017, according to the latest Form 5500 filing.