A federal appeals court upheld a decision by a U.S. District Court in Denver supporting Great-West Capital Management and Great-West Life & Annuity Insurance Co. against claims by participants in several retirement plans and individual retirement accounts that the companies charged excessive fees for advisory and administrative services.
Plaintiffs contended that the defendants violated the Investment Company Act of 1940 relating to excessive fees and fiduciary duties of investment advisers.
The 10th U.S. Circuit Court of Appeals in Denver issued its 3-0 ruling July 26 in the case of Obeslo et al. vs. Great-West Life & Annuity Insurance Co. et al., a consolidation of three lawsuits making similar claims. The first lawsuit was filed in January 2016.
To reverse the District Court's pro-defendant ruling in August 2020, the plaintiffs "must show the district court's conclusions were impermissible" and that the conclusions didn't follow the Investment Company Act guidelines, the judges wrote. "Plaintiffs cannot do so."
The judges also wrote that "plaintiffs propose an alternative interpretation of the facts," adding that "they do not highlight clearly erroneous information or fatally discredit any of the district court's findings."
U.S. District Court Judge Christine M. Arguello had ruled against the plaintiffs because they "failed to meet their burden of proof with respect to claims that defendants breached their fiduciary duties."
She also wrote that the "plaintiffs failed to meet their burden to prove that they suffered actual damages due to plaintiffs' conduct."
Ms. Arguello conducted an 11-day bench trial in January 2020. "The court finds that plaintiffs failed to prove by a preponderance of the evidence that defendants breached their fiduciary duties," she wrote. "Defendants presented persuasive and credible evidence that overwhelmingly proved that their fees were reasonable and that they did not breach their fiduciary duties."
Great-West Life & Annuity Insurance Co is a subsidiary of Great-West Lifeco Inc., a financial services holding company. The record keeper, Empower Retirement, which is not a defendant, is a division of Great-West Life. Great-West Capital Management, an affiliate of Great-West Life, is an investment adviser to Great-West Funds Inc., which provides mutual funds to clients.