Allianz Asset Management of America will pay $7.5 million to settle an ERISA lawsuit filed by current and former employees, according to a settlement document submitted Aug. 18 to a U.S. District Court in Santa Ana, Calif.
The plaintiffs sued in January 2023 and later amended their complaint, criticizing the company's 401(k) plan offering of proprietary investments that they said violated ERISA's rules against self-dealing.
The parties began negotiating a settlement in mid-May. They reached an agreement-in-principle four weeks ago, but they didn't disclose the terms at that time in the class-action case of Rocke et al. vs. Allianz Asset Management of America LP et al.
"To avoid the risks and uncertainty of further litigation, and after consulting with counsel and considering the facts and applicable law, the settling parties wish to fully and finally resolve this action," said the settlement agreement, which requires court approval.
"Defendants deny all liability to the named plaintiffs, deny all of the claims made in the action, deny all allegations of wrongdoing made in any of the complaints in this action, and deny that the named plaintiffs, the plan, or any of the plan's current or former participants suffered any losses," the settlement document said.
"Defendants further maintain that they acted prudently and loyally at all times when acting in any fiduciary capacity with respect to the Plan," the document said.
In addition to the payment, Allianz also agreed to several other actions within three years of the settlement taking effect. It will hire an independent investment consultant to:
- Evaluate "the suitability of the plan's investment structure, including the number of investments, asset classes, and investment styles (passive vs. active) offered."
- Conduct an annual evaluation of all plan investments "including each investment's fees and performance compared to a suitable peer group and specific, unaffiliated options in the same asset class."
- Examine "the suitability of replacing the plan's current capital preservation option with a stable value fund."
Allianz Asset Management of America LP 401(k) Savings and Retirement Plan, Newport Beach, Calif., had $1.9 billion in assets as of Dec. 31, 2021, according to the latest Form 5500.
