Franklin Resources Inc., San Mateo, Calif., has agreed to pay $13.85 million to settle claims by participants in the Franklin Templeton (BEN) 401(k) Retirement Plan that plan managers violated their fiduciary duties.
The proposed settlement outlining the terms, which requires approval for a U.S. District Court in Oakland, Calif., was filed Feb. 15. The parties announced on Dec. 10 that they had reached a preliminary agreement but didn't provide details.
Franklin Resources had been sued twice — once in July 2016 and again in November 2017 — by plan participants who said plan managers breached their fiduciary duties by packing the investment lineup with proprietary products and failing to negotiate lower fees.
The lawsuits were consolidated in the class action case of Cryer et al. vs. Franklin Resources Inc. et al. The company and other defendants denied allegations of wrongdoing, according to the settlement document.
In addition to the payment, Franklin Resources agreed to direct the plan's investment committee to add a non-proprietary target-date fund to the plan's investment lineup, the settlement agreement said.
Plaintiffs' attorneys fees, which are subject to court approval, will come from the gross settlement amount. The settlement covers participants in the plan from July 28, 2010, until the judge approves the agreement.
The 401(K) plan had assets of $1.42 billion as of Dec. 31, 2017, according to the latest Form 5500.