McKinsey & Co., New York, has agreed to settle a complaint by a participant in two company retirement plans who alleged that fiduciaries violated their ERISA duties.
The notice of an agreement-in-principle was filed May 26 in a U.S. District Court in New York by the law firm representing the plaintiff in the case of Bhatia vs. McKinsey & Co. et al. Terms are expected to be announced July 15, the notice said.
The lawsuit was filed in February 2019, seeking class-action status. The participant argued that McKinsey and a subsidiary, MIO Partners, also a defendant, operated two plans whose costs were more than 13 times the median costs of plans of similar asset sizes.
"The added cost did not bolster participants' investment returns," the original complaint said. "Instead, the plans performed in the bottom 5% compared to peer plans."
MIO, which manages the plans' investments, "has failed to consider replacing its portfolios with superior alternatives" to MIO proprietary products, the lawsuit said.
"Defendants have not acted in the interest of the plans' participants or followed prudent processes to advance participants' interests or defray participants' costs," the complaint said.
By Dec. 31, 2018, according to the latest Form 5500 statements, the McKinsey & Company Inc. Profit-Sharing Retirement Plan had assets of $5.17 billion in assets and the McKinsey & Company Inc. Money Purchase Pension Plan had assets of $1.06 billion.