Participants in a $4.5 billion 401(k) plan sponsored by State Street Corp. have filed a class-action suit against the company, its subsidiaries and unnamed executives for alleged ERISA violations.
The suit, filed Tuesday in federal court in Boston by Elizabeth Gomes and others on behalf of participants in the State Street Salary Savings Program, alleges that from May 25, 2015 to the present, State Street repeatedly and consistently selected investment funds managed by State Street or one of its subsidiaries for the plan over better-performing alternatives.
The suit argues that the actions were done to financially benefit State Street to the detriment of the plan's performance and profitability, with State Street gaining more than $615 million in "fees and other revenue" and the plan to lose "millions of dollars a year."
"By choosing and then retaining these proprietary investment funds, to the exclusion of alternative investments available in the 401(k)-plan marketplace, defendants enriched themselves at the expense of their own employees," the complaint said. "Defendants also breached their fiduciary duties by failing to monitor the plan's administrative fees, and likewise failing to consider the prudence of retaining a poorly performing money market fund."
Amanda F. Lawrence, an attorney at the law firm Scott & Scott Attorneys at Law LLP, who's representing the plaintiffs, could not be immediately reached for comment. Brendan Paul, a spokesman for State Street, declined to comment.