A participant in the Goldman Sachs Group Inc. 401(k) plan sued the company and plan executives, alleging a series of ERISA violations ranging from excessive fees to inadequate monitoring of plan investments.
"Defendants failed to administer the plan in the best interest of participants and failed to employ a prudent process for managing the plan," said the lawsuit, Falberg vs. Goldman Sachs Group Inc., filed Oct. 25 in a New York U.S. District Court. "Instead, defendants managed the plan in a manner that benefited Goldman Sachs at the expense of participants."
The plaintiff, who seeks class-action status for his complaint, said plan fiduciaries kept many underperforming proprietary Goldman Sachs mutual funds in the investment lineup until removing them in 2017.
"This act of self-preservation, however, arrived too late," the lawsuit said. "An objective fiduciary in the same position would have removed these funds promptly at the start of the class period and certainly before 2017." The lawsuit said the class period, when the ERISA violations began, runs from Oct. 25, 2013 until current.
"We dispute the allegations and intend to defend against the lawsuit," Patrick Scanlan, a Goldman Sachs spokesman, wrote in an email.
The lawsuit accused the company of "failing to monitor and evaluate performance the performance of the plan's fiduciaries or have a system in place for doing so."
The lawsuit also criticized the company for "failing to monitor the processes by which plan investments were evaluated" and for "failing to remove fiduciaries whose performance was inadequate."
The Goldman Sachs 401(k) Plan, New York, had assets of $7 billion as of Dec. 31, according to the latest Form 5500.