J.P. Morgan Chase agreed to pay $9 million to settle allegations by current and former participants in the company's 401(k) plan that fiduciaries violated their ERISA duties by retaining expensive investment options and failing to look for cheaper and better-performing replacements.
Terms of the preliminary settlement, which still requires court approval, were filed May 22 in U.S. District Court in New York. The parties had announced in early April that they had reached a tentative agreement in the case of Beach et al. vs. J.P. Morgan Chase Bank et al.
"The immediate and meaningful benefits of settling balanced against the risks, costs, delay and uncertainties attendant to continued litigation, favor approval of the settlement," said a document filed by plaintiffs' attorneys in support of the settlement.
J.P. Morgan and its affiliated defendants declared there was no wrongdoing, according to the settlement document.
Plaintiffs sued in January 2017 — and amended their complaint in July 2017 — accusing plan executives of offering several proprietary funds "despite having access to less expensive investment options that performed just as well, if not better, than the proprietary or third-party funds at issue in which the bank was self-interested or otherwise conflicted."
The settlement affects participants who invested in any of five stand-alone equity, bond funds and/or target-date funds. The settlement was achieved with the help of a mediator. The defendants will hire an independent fiduciary to review and authorize the settlement.
The J.P. Morgan Chase 401(k) Savings Plan, New York, had assets of $26.5 billion as of Dec. 31, 2018, according to the latest Form 5500 report.