Current and former participants in a 401(k) plan run by Teva Pharmaceuticals USA Inc. have sued the company, directors and plan executives alleging violations of ERISA over fees and monitoring investments.
"The plan had substantial bargaining power regarding the fees and expenses that were charged against participants' investments," said the Dec. 6 complaint filed in a U.S. District Court in Philadelphia. "Defendants, however, did not try to reduce the plan's expenses or exercise appropriate judgment to scrutinize each investment option that was offered in the plan to ensure it was prudent."
The allegations are "baseless," Teva spokeswoman Kelley Dougherty wrote in an email.
"Teva always acts in the best interest of its 401(k) plan participants and continues to seek and receive expert, sector-leading advice in doing so," she wrote. "Teva denies the allegations."
The participants' allege the defendants breached their fiduciary duties by failing to consider collective investment trusts as options instead of mutual funds, saying that the former are cheaper, in the case of Pinnell et al. vs. Teva Pharmaceuticals USA Inc. et al.
The participants also criticized plan executives' choice of mutual fund share classes. "There is no good-faith explanation for utilizing high-cost share classes when lower-cost share classes are available for the exact same investment," the lawsuit said.
Teva Pharmaceuticals USA Inc., North Wales, Pa., is a wholly owned subsidiary of Israel-based Teva Pharmaceutical Industries Ltd. The parent company isn't a defendant.
The Teva Pharmaceuticals Retirement Plan had assets of $1.66 billion as of Dec. 31, 2018, according to the latest Form 5500 filing.