A federal judge in New Jersey tossed a lawsuit against Prudential Insurance Co. of America over the alleged mismanagement of the company's workplace retirement savings plan.
In a 30-page opinion issued Monday, U.S. District Judge John Michael Vazquez ruled that the lawsuit filed by a former Prudential employee failed to provide sufficient facts to support claims of purported plan violations.
The lawsuit, originally filed in November 2019, alleged that Prudential breached its fiduciary duties under ERISA by overpopulating the plan with proprietary mutual funds, failing to monitor the performance of those funds, and neglecting to adequately disclose the amount of record-keeping fees received by Prudential — failures that the plaintiff claimed "resulted in the payment of grossly excessive fees to Prudential and significant losses to the plan and its participants."
The plaintiff also accused Prudential of engaging in prohibited transactions and allowing unreasonable expenses to be charged to participants for administration of the plan.
Mr. Vazquez found fault with virtually all the claims made in the lawsuit, challenging, for example, the plaintiff's accusation that the Prudential-affiliated funds "under-performed reasonable comparators and cost significantly more than readily available peer funds." Mr. Vazquez took issue with the plaintiff comparing each of "the challenged funds to a single corresponding Vanguard fund."
"If a comparison to a single cheaper fund with similar investment styles sufficed to create a reasonable inference to imprudence, ERISA plaintiffs could challenge any fund so long as they could identify one cheaper fund sharing some alleged similarities with the challenged fund," Mr. Vazquez wrote in his opinion.
Other defendants named in the lawsuit include the Prudential Employee Savings Plan Administrative Committee, the Prudential Investment Oversight Committee, and Bellwether Consulting, an entity responsible for ensuring that the investments included in the plan were prudent.
Mr. Vazquez gave the plaintiff 30 days to file an amended complaint to address the deficiencies he described. Prudential declined to comment on the dismissal. Attorneys for the plaintiff did not immediately respond to a request for comment.