A federal court judge in Charlotte, N.C., has ruled in favor of Aon Investments USA, saying the investment consulting firm didn't violate ERISA rules in its work with a 401(k) plan run by Lowe's Cos., Mooresville, N.C.
Aon and Lowe's were defendants in the case of Reetz vs. Lowe's Companies Inc. et al, in which a 401(k) plan participant alleged ERISA violations in the plan's offering of an Aon investment, arguing that Aon had a conflict of interest in offering the Aon Growth Fund.
The participant, Benjamin Reetz, accused the defendants of limiting investment choices in the 401(k) plan lineup and transferring more than $1 billion in plan assets to the Aon fund, causing a loss to participants. Mr. Reetz filed the lawsuit in April 2018.
Lowe's and Mr. Reetz announced a $12.5 million settlement in May. The class-action settlement was approved by U.S. District Court Judge Kenneth D. Bell in September.
In addition to making the payment, Lowe's agreed to conduct an RFP "to consider engaging a new delegated fiduciary investment manager for the plan as well as alternative investment options and strategies," according to court documents. Lowe's admitted no wrongdoing.
However, no settlement had been reached between Mr. Reetz and Aon Investments USA, formerly known as Aon Hewitt Investment Consulting, leading Mr. Bell to conduct a bench trial for five days in late June and early July.
"The court finds that Aon did not breach its fiduciary duty as an investment adviser to the plan in proposing and encouraging Lowe's to change the plan's investment structure," Mr. Bell wrote in a opinion Tuesday."Nor did it violate ERISA in its efforts to 'cross-sell' its delegated fiduciary services, which Lowe's – a large, sophisticated corporation – independently decided to engage."
Although the Aon Growth Fund "did not generate as much investment gains as other investment options that, in hindsight, would have fared better, it did not breach its fiduciary duty to the plan in selecting and maintaining the Aon Growth Fund as the primary actively managed 'equity' investment option in the plan," Mr. Bell wrote.
