A federal judge in Denver has ruled against dismissing most ERISA allegations against Janus Henderson U.S. (Holdings) Inc. and its 401(k) plan fiduciaries by plan participants who criticized fees, investment selection and the use of proprietary investments.
Senior U.S. District Court Judge Raymond P. Moore wrote Jan. 22 that he accepted a report by a U.S. magistrate judge saying that most of the participants' complaints should survive a motion to dismiss in Schissler et al. vs. Janus Henderson U.S. (Holdings) Inc. et al.
Key issues for trial are allegations that defendants failed to remove underperforming mutual funds, failed to use a reasonable investment selection process, charged "above-average expenses without commensurate performance," and engaged in self-dealing by offering proprietary products, Moore wrote.
"The court agrees that plaintiffs' allegations are sufficient to state a claim that defendants failed to meet their continuing duty to monitor the plan's investments and remove imprudent ones," the judge wrote. The lawsuit, which seeks class-action status, was filed in September 2022 and later amended.
"Plaintiffs provide multiple analyses indicating that expense ratios for the JH (Janus Henderson) Funds were higher than those of similar funds and that the JH Funds did not perform as well as similarly situated funds," Moore wrote.
"Defendants' contention that plaintiffs failed to allege a violation of the duty of loyalty is similarly unavailing," the judge wrote, referring to the ERISA provision that covers self-dealing and allegations that fiduciaries place their interests above those of participants.
"Although there are factual disputes as to whether any benefit to defendants was merely incidental, the court agrees that plaintiffs' allegations are sufficient to state a claim," Moore wrote.
Janus 401(k) and Employee Stock Ownership Plan, Denver, had $408 million in assets as of Dec. 31, 2022, according to the latest Form 5500.