General Electric will pay $61 million to settle a six-year-old lawsuit by 401(k) participants who alleged that the plan violated ERISA by offering expensive, poor-performing proprietary mutual funds and failing to monitor these investments.
The settlement document was filed Oct. 6 with a U.S. District Court in Boston in the case of In re: GE ERISA Litigation, which represents consolidation of four similar lawsuits filed in 2017. The terms must be approved by the court, including total attorneys' fees, which usually amount to one-third of settlement amounts.
An agreement in principle for the class-action settlement was announced in early August, but no terms were revealed at that time in a settlement achieved through mediation.
"Defendants have denied that they breached their fiduciary duties under ERISA or engaged in prohibited transactions and have denied that plan participants suffered any losses as the result of the alleged breaches of fiduciary duty," said the settlement document, which was filed by attorneys representing the plaintiffs.
"Few ERISA plaintiffs have been successful at trial," the document said. "To date, plaintiffs' counsel have incurred almost $1.4 million in expenses and charges."
The document noted that expenses would have increased "substantially" if the case went to trial. "Plaintiffs also considered that, even if they were victorious at trial, the case could be tied up for years with post-trial motions and appeals … The settlement avoids these potential costs and delays."
The complaint covered five proprietary mutual funds, which were provided by GE Asset Management, a wholly owned subsidiary of General Electric. The company sold the subsidiary to State Street Corp. in July 2016. State Street isn't a defendant.
A spokesperson for one of the plaintiffs' law firms, Sanford Heisler Sharp, wrote in an email that it will take several months to determine how many participants are affected by the settlement, pending a report by the 401(k) plan's record keeper to the settlement claims administrator. The settlement covers anyone who invested in one or more of the challenged mutual funds between Sept. 26, 2011, and Aug. 3, 2023
The GE Retirement Savings Plan, Norwalk, Conn., had assets of $30.4 billion as of Dec. 31, 2021, according to the latest Form 5500.
