Four days before a trial was scheduled to start, attorneys representing the Massachusetts Institute of Technology and participants in a university 401(k) plan announced they had reached a settlement in an ERISA case.
No terms were announced in the notice of settlement filed Thursday in U.S. District Court in Boston for the class-action lawsuit of Tracey et al. vs. Massachusetts Institute of Technology et al.
"The parties have reached an agreement in principle to settle this case," the notice said. "Plaintiffs anticipate needing 45 days to file a motion for preliminary approval," which will include details of the settlement. The deadline for the request is Oct. 28.
The settlement agreement follows the ruling last week by U.S. District Judge Nathaniel M. Gorton rejecting the request by MIT to issue a summary judgment against all of the participants' complaints of fiduciary breaches by the 401(k) plan's executives. Mr. Gorton did support the defendant's request on some issues but ruled for the plaintiffs on others.
The participants sued in 2016, alleging that plan executives failed to monitor the plan's investments, allowed excessive fees for record keeping and administrative expenses, and favored Fidelity Investments, the record keeper, in offering certain investment options.
"The viable claims for trial are breach of the duty for failure to monitor (investments); breach of the duty of prudence of excessive record keeping and administrative fees; and the corresponding derivative claims that MIT failed to monitor its appointed fiduciaries," Mr. Gorton wrote.
The MIT Supplemental 401(k) Plan had $4.5 billion in assets as of Dec. 31, 2018, according to the latest Form 5500 filing.