A federal judge in Chicago issued a split decision in an ERISA lawsuit filed against accounting firm BDO USA LLP and its fiduciaries, dismissing some charges but allowing other allegations to proceed to trial.
Three former employees sued in April 2022, alleging executives for the defined contribution plan violated ERISA by offering retail-priced mutual fund shares instead of institutional-priced shares, keeping underperforming investments, charging excessive investment management fees and charging excessive record-keeping fees.
The plaintiffs "alleged that plan participants receive no addition additional benefits in the retail share classes and that the only difference between the classes is cost," U.S. District Judge Matthew F. Kennelly wrote Tuesday in Gaines et al. vs. BDO USA LLP et al.
The plaintiffs have "sufficiently alleged that BDO acted imprudently by selecting retail share classes instead of institutional share classes," Mr. Kennelly wrote.
As for retaining poor-performing funds, the judge agreed with the plaintiffs, writing that "the totality" of their complaint is "sufficient at the pleading stage to support (their) duty of prudence claim."
However, Mr. Kennelly dismissed the allegations of excessive investment management fees and excessive record-keeping fees.
BDO USA LLP Retirement Plan, Chicago, had $1.5 billion in assets as of Dec. 31, 2021, according to the latest Form 5500.