A former employee of Prudential Insurance Co. of America has sued the company and fiduciaries of the company's 401(k) plan, alleging a series of ERISA violations including self-dealing in the selection of investment options.
The lawsuit accused plan executives of "selecting and retaining high-cost and poor-performing investments" including several proprietary products and "failing to fully disclose to participants the expenses and risk of the plan's investment options."
The complaint, Young Cho vs. The Prudential Insurance Company of America et al., was filed Nov. 5 in a Newark, N.J., District Court. Andrew Simonelli, a Prudential spokesman, said the company declined to comment.
"Defendants decided to overpopulate the plan with funds managed by Prudential and its affiliates," the lawsuit said. Prudential serves as the plan's record keeper, "providing yet a further stream of revenue and extra benefit for Prudential."
The 401(k) plan's fiduciaries "chose many Prudential funds to benefit Prudential, the sponsor of the plan, without investigating whether plan participants would be better served by investments managed by unaffiliated companies," the lawsuit said.
The lawsuit, which seeks class-action status, argued that the defendants "failed to monitor" all plan investments "to ensure that they provided adequate returns and were not excessively priced."
The Prudential Employee Savings Plan had $8.2 billion in assets as of Dec. 31, 2018, according to its latest Form 5500.