Brown University, Providence, R.I., settled a class-action lawsuit alleging the university's 403(b) plans' managers breached their fiduciary duties under ERISA by offering too many similar investment options and paying excessive fees for investments.
According to the settlement agreement Monday in the U.S. District Court in Providence, the $3.5 million deal will settle all claims from the July 2017 lawsuit, Short et al. vs. Brown University.
That lawsuit, originally filed by four participants in the plans, alleged the university "consistently selected and retained investment options for the plans that historically and consistently underperformed their benchmarks and charged excessive management fees" in the Brown University Legacy Retirement Plan and the Brown University Deferred Vesting Retirement Plan, according to the original filing.
The legacy plan had more than $1 billion in assets and the deferred vesting plan had assets of $244 million as of Dec. 31, 2015, according to the lawsuit.
"We are fully confident that our retirement plans are in compliance with all applicable laws, including the Employee Retirement Income Security Act. In considering the prospect of years of costly litigation to vigorously defend this case, the university determined that the most prudent course of action was settlement," university spokesman Brian Clark said in an email.