Bessemer Trust Co. has agreed to pay $5 million to settle a lawsuit by former participants in a company 401(k) plan, who alleged plan executives violated ERISA by favoring the company's mutual fund business.
"Although defendants dispute the named plaintiffs' allegations and deny any and all liability for any alleged violations of ERISA or any other law, they do not oppose the relief sought in this motion," said the settlement notice filed March 10 by the plaintiffs' attorneys in a U.S. District Court in New York.
The plaintiffs contended that Bessemer's heavy use in its 401(k) plan of investments from its Old Westbury mutual fund business was imprudent and an ERISA violation.
The original lawsuit was filed by one plaintiff in January 2022 in a U.S. District Court in Newark, N.J. The complaint was transferred to a U.S. District Court in New York, and the complaint was later amended to add a second plaintiff in the case of Pecou at al. vs. Bessemer Trust Co. et al.
Although the defendants filed a motion to dismiss, both parties entered into mediation, telling U.S. District Court Judge Mary Kay Vyskocil to hold off on a ruling while they negotiated.
"There is no doubt that continuing the litigation would have resulted in complex and costly proceedings, and it would have delayed any relief to the class, even if the named plaintiffs ultimately prevailed," the plaintiffs' attorneys wrote in the settlement notice.
The class-action settlement, which requires court approval, covers all participants in the Bessemer Trust Company 401(k) and Profit Sharing Plan, Woodbridge, N.J., from Jan. 26, 2016, through the effective settlement date.
The plan had assets of $610.1 million as of Dec. 31, 2021, according to the latest Form 5500.