Four former employees of NVIDIA Corp., Santa Clara, Calif., filed a class-action lawsuit against the computer graphics company alleging it failed to investigate lower-cost investment options than those provided in the company's 401(k) plan.
In a complaint filed Aug. 28 in U.S. District Court in San Jose, Calif., the plaintiffs faulted the company for not trying to reduce the plan's expenses even though it had substantial bargaining power over the fees and expenses that were charged against participants' investments.
The plaintiffs claim that NVIDIA, its board of directors and 401(k) benefits plan committee breached their fiduciary duties by failing to "review the plan's investment portfolio with due care to ensure that each investment option was prudent in terms of cost" and maintaining certain funds despite the availability of identical or similar investment options with lower costs and/or better performance histories.
Specifically, the plaintiffs criticized the defendants for failing to use the lowest-cost share class for many of the mutual funds within the plan and for failing to investigate collective investment trusts as alternatives to mutual funds. They also blamed the defendants for not monitoring the "grossly excessive compensation paid for record-keeping services."
As a result of the breaches, the plan accrued millions of dollars per year in unnecessary fees, the plaintiffs alleged throughout the complaint. Had defendants complied with their fiduciary obligations, "the plan would not have suffered these losses, and plan participants would have had more money available to them for retirement," they said in the complaint.
The lawsuit covers the period from Aug. 28, 2014, through the date of judgment.
Among other things, the plaintiffs are looking to compel the defendants to "make good" on all losses to the plan resulting from defendants' breaches of their fiduciary duties.
The company's 401(k) plan had $1.02 billion in assets as of Dec. 31, 2018, according the latest Form 5500 on file with the Department of Labor.