Southwest Research Institute has agreed to pay $500,000 to settle an ERISA lawsuit filed by a participant in the company's 403(b) plan who criticized the plan for keeping the same investment adviser, investment manager and record keeper since 2009 without seeking information about other providers.
The class-action settlement document, which requires court approval, was filed March 11 in a U.S. District Court in San Antonio, Texas, in the case of Drust vs. Southwest Research Institute et al. The parties reached an agreement in principle in January.
In the original complaint filed in June 2023, the plaintiff alleged that "since at least 2009, defendants have maintained a plan investment menu consisting solely of investments managed by TIAA or its affiliate the College Retirement Equities Fund."
The lawsuit said the plan contained "at least twenty TIAA investments and zero investments managed by other investment companies." TIAA-CREF isn't a defendant.
"This settlement agreement, and the discussions between the settling parties preceding it, shall in no event be construed as, or be deemed to be evidence of, an admission or concession on defendant's part … of any fault or liability whatsoever," the settlement document said. "Defendant further maintains that it acted prudently and loyally at all times when acting in any fiduciary capacity with respect to the plan."
The document added that the parties agreed to settle "to avoid the risks and uncertainty of further litigation."
In addition to the payment, the agreement provides that no later than 12 months following the settlement's effective date, Southwest will hire an independent consultant or consultants "to assist with the monitoring of the plan's investments" for three years.
The Southwest Research Institute Retirement Plan, San Antonio, Texas, had $1.37 billion in assets as of Dec. 31, 2022, according to the latest Form 5500.
