SEI Investments Co., Oaks, Pa., agreed to settle a class action suit filed by a former participant in the company's 401(k) plan who alleged that plan executives violated their fiduciary duties by filling the investment lineup with proprietary products.
The preliminary agreement called for payment of $6.8 million to be apportioned among some 5,600 current and former participants – minus a maximum $2.27 million for plaintiff attorney fees, subject to court approval – according to a settlement document filed July 26 in U.S. District Court in Philadelphia.
The agreement, which requires court approval, also said SEI must "ensure that investment committee members participate in a training session on ERISA's fiduciary duties." The lawsuit is Gordon Stevens vs. SEI Investments Co. et al.
The agreement also said SEI will retain the services, for at least three years, of an "unaffiliated investment consultant to provide an evaluation of the design of the plan's investment lineup and the review the plan's investment policy statement."
Mr. Stevens sued in September 2018, alleging that the plan's offering of proprietary investments represented a breach of fiduciary duties because "a prudent and unbiased fiduciary would not have retained" them, according to court documents. His complaint said 12 of the 13 investment options as well as a target-date series were proprietary SEI products.
After the defendants filed a response in December denying wrongdoing, the parties agreed to hire a mediator, according to court documents. They reached an initial settlement on May 14.
The SEI Capital Accumulation Plan had $514.3 million in assets as of Dec. 31, 2017, according to the latest Form 5500 filing.
