A U.S. District Court judge in Denver sanctioned law firm Schlichter Bogard & Denton for "recklessly" pursuing claims in a shareholder derivative lawsuit against Great-West.
In the order filed Monday, Judge Christine M. Arguello ordered Schlichter Bogard to pay up to $1.5 million for Great-West's costs, expenses and attorney fees related to a lawsuit filed by 401(k) plan participants against Great-West.
That lawsuit, filed by participants in the Duplass, Zwain, Bourgeois, Pfister & Weinstock APLC 401(k) Plan, alleged that fees charged by Great-West via its Empower Retirement record-keeping business violated the Investment Company Act's section that prohibits fees "so disproportionately large that (they) bear no reasonable relationship to the services rendered and could not have been the product of arm's length bargaining," according to Monday's court filing.
The lawsuit was dismissed Aug. 7 by Ms. Arguello. In Monday's sanction order, she said the plaintiffs relied entirely on the opinions of one expert named J. Christopher Meyer that both the court and defendants had warned were factually inaccurate. In spite of the "red flags" noted in the order, plaintiffs went to trial relying solely on Mr. Meyer as the only means of calculating damages suffered, and when he testified, he was "thoroughly discredited," the filing says.
Stephen Gawlik, spokesman for Empower Retirement, and Jerome J. Schlichter, managing partner at Schlichter Bogard & Denton, could not be immediately reached for comment.