Vanderbilt University, Nashville, Tenn., will pay a proposed $14.5 million to settle a class-action ERISA fiduciary lawsuit charging the university failed to prevent excessive fees for record-keeping, investment and administrative services.
The parties have "reached a proposed settlement that provides meaningful monetary and significant non-monetary relief to each class member," according to a filing Monday in U.S. District Court in Nashville.
The lawsuit was one of a number originally filed in 2016 against universities for breaching their fiduciary duties in the management of 403(b) plans, charging they failed to use their bargaining power to prevent excessive fees for record-keeping, investment and administrative services. At the time the original lawsuit was filed, Vanderbilt's 403(b) plan used four record keepers that offered a total of 340 investment options. The plan later hired Fidelity Investments as a single record keeper.
Plaintiffs also filed an amended complaint in June 2018, alleging the university failed to protect plan assets by allowing third parties to market services to participants. The lawsuit had been scheduled to go to trial on Nov. 5 this year.
As of Dec. 31, 2017, Vanderbilt's two 403(b) plans had about $4.1 billion in total assets, according to the university's most recent Form 5500 filings.
"University employees have the same right to build their retirement assets as corporate employees and this will not only compensate Vanderbilt employees for past losses but will provide a much improved plan for years into the future," said Jerome Schlichter, senior partner at Schlichter, Bogard & Denton, attorney for the plaintiffs, in an email.
Ann Marie Owens, university spokeswoman, could not be immediately reached to provide comment.