Participants in Liberty Mutual Group's $7 billion 401(k) plan filed a class-action lawsuit against the firm and the plan's administrative committee claiming they made irresponsible investment options and failed to properly monitor and control record-keeping fees in violation of ERISA.
The suit, filed April 10 in U.S. District Court in Boston, alleges that Liberty Mutual "allowed unreasonable expenses to be charged to participants for administration of the plan and for managed account services, and retained poorly performing investments that similarly situated fiduciaries removed from their plans."
Defendants are also accused of selecting and retaining "imprudent investment options" for the defined contribution plan. Examples cited include Sterling Capital Management's midcap value equity portfolio despite underperforming for years, and Wells Fargo's Government Money Market Fund as the plan's "only stable income investment option" even though there are several other stable value fund options available "with much higher returns in all markets."
The defendants' actions led to plan participants suffering significant financial losses, according to the class action.
“We look forward to bringing out the facts at trial, which show Liberty Mutual employees and retirees should receive compensation for their substantial losses,” said Jerome Schlichter, founding and managing partner of Schlichter Bogard & Denton and lead counsel for the plaintiffs.
A Liberty Mutual spokesman declined to comment.