Northern Trust Co. has agreed to pay $6.9 million to settle a lawsuit by participants in a company 401(k) plan who accused the company and its fiduciaries of violating federal law by failing to monitor plan investments, most notably a proprietary target-date series, and by charging excessive administrative and investment fees.
The proposed settlement was filed Jan. 6 by plaintiffs' attorneys in a U.S. District Court in Chicago.
The class action settlement, unopposed by Northern Trust, will affect approximately 14,000 participants, according to the document which requires court approval.
Participants filed the original lawsuit in June 2021 and amended it in October 2021, alleging violations of fiduciary duty under ERISA in the case of Conlon et al. vs. The Northern Trust Co. et al. A federal district court judge in Chicago rejected the defendants motion to dismiss in August 2022.
The parties reached an agreement in principle in October through the aid of a mediator, but didn't reveal terms at that time.
"Defendants denied and continue to deny plaintiffs' allegations," the settlement document said. "Defendants dispute that any of the plan's fiduciaries committed or participated in any fiduciary breach related to the use of" the Northern Trust target-date series.
Plaintiffs had argued that the Northern Trust defendants kept the target-date series in the investment lineup "to advance their own business interests rather than acting solely in plan participants' interests," the document said. They contended that the target-date series was a chronic underperformer with high fees.
The plaintiffs said a settlement was the best choice because "the trial in this matter would have been complex, and there was certainly no guarantee of a verdict in favor of the plaintiffs," the document said.
The Northern Trust Co. Thrift-Incentive Plan, Chicago, had $2.92 billion in assets as of Dec. 31, 2023, according to the latest Form 5500.
