A federal judge in New York has rejected a lawsuit by a participant in a Goldman Sachs 401(k) plan who accused the company and plan fiduciaries of violating ERISA by mismanaging the plan.
"The court finds that defendants did not breach any of their fiduciary duties," said the Wednesday opinion by U.S. District Judge Edgardo Ramos in granting summary judgment for the defendants in the case of Leonid Falberg vs. The Goldman Sachs Group Inc. et al.
A motion for summary judgment is usually filed after the parties have completed discovery, giving a judge the opportunity to review details of a case. A motion to dismiss, usually requested soon after a complaint is filed, argues that the plaintiff has failed to state a claim.
Mr. Falberg sued in October 2019 claiming, among other things, that the plan charged excessive fees and that fiduciaries failed to adequately monitor plan investments.
Mr. Falberg argued that fiduciaries violated ERISA's duty of prudence because they didn't adopt an investment policy statement.
"But it is undisputed that an IPS is not required under ERISA," the judge wrote. "And, despite Falberg's suggestions to the contrary, the Department of Labor has never taken the position that an IPS is required to satisfy a fiduciary's duties."
Mr. Falberg also contended that fiduciaries had a conflict of interest by offering five proprietary investments from Goldman Sachs Asset Management, which were dropped from the plan menu in 2017.
Fiduciaries "uniformly testified that they applied no different standard for GSAM funds than for any other fund, and that the evaluated each investment option on its merits," the judge wrote."Falberg does not point to any authority showing a failure to expeditiously remove underperforming funds amounts to a breach of the duty of loyalty."
The Goldman Sachs 401(k) Plan, New York, had assets of $9.6 billion as of Dec. 31, 2020 according to the latest Form 5500.