Participants in the Astellas U.S. Retirement and Savings Plan have filed suit against Astellas U.S. and Aon Hewitt Investment Consulting, now known as Aon Investments USA, for breaching their fiduciary duties in managing the $932 million 401(k) plan.
The class-action lawsuit filed July 1 in U.S. District Court in Chicago alleges that after Astellas and the administrative committee appointed Aon as the plan's discretionary investment manager in 2016, the defendants replaced almost all the plan's mutual funds with six collective investment trusts, five of which were Aon's.
The complaint further alleges that defendants failed to properly investigate the merits of Aon's CITs before placing them in the plan. If they had, according to the suit, they would have seen that the CITs underperformed not only the benchmarks selected by Aon and the CITs' style-specific benchmarks, but also the comparable mutual funds they replaced.
"Instead of acting in the exclusive best interest of participants, Aon Hewitt acted in its own interest by causing the Plan to invest in Aon Hewitt's proprietary collective investment trusts, which benefited Aon Hewitt at the expense of Plan participants' retirement savings," the class action stated. "The Astellas Defendants also failed to use the Plan's bargaining power to negotiate reasonable fees, which caused unreasonable expenses to be charged to the Plan and participants for investment management services."
The suit contends that these actions cost plan participants "millions of dollars in performance losses."
Plaintiffs are demanding a jury trial.
"We contend Astellas and Aon Hewitt worked together to place Aon Hewitt's proprietary funds in the plan without prudent review of those funds and failed to consider other alternatives, harming participants substantially," said Jerome J. Schlichter, senior partner at Schlichter Bogard & Denton, the plaintiffs' attorney, in an email.
Astellas U.S. spokeswoman Christy Noland and Aon spokesman Robert Elfinger declined to comment.