Four participants in an AllianceBernstein 401(k) plan have sued the company and plan fiduciaries, alleging ERISA violations because they "repeatedly failed to remove or replace imprudent proprietary investments."
The lawsuit, filed Dec. 14 in a New York U.S. District Court, seeks class-action status in Bloom et al. vs. AllianceBernstein L.P. et al.
"These funds were not selected and retained as the result of an impartial or prudent process but were instead selected and retained because defendants benefited financially from their inclusion in the plan to the detriment of the participants," the lawsuit said. "Defendants committed further statutory violations by engaging in conflicted transactions expressly prohibited by ERISA."
Carly Symington, an AllianceBernstein spokeswoman, wrote in an email that the company declined to comment.
"The plan had tremendous bargaining power to obtain superior investments with a solid performance record," the lawsuit said. "In particular, at all relevant times, there have been many non-AllianceBernstein-branded and well-managed investment options in the 401(k)-plan marketplace available to the plan."
The plaintiffs accused the defendants of "using the plan to promote and develop AllianceBernstein's investment management business (including using plan assets as seed money for the newly launched proprietary AB funds) to the detriment of the plan," the lawsuit said.
The Profit Sharing Plan for Employees of AllianceBernstein L.P., Nashville, Tenn., had assets of $1.56 billion as of Dec. 31, 2021, according to the latest Form 5500.