Reliance Trust Co. agreed to pay $40 million to settle a lawsuit accusing it of ERISA violations related to its role trustee of an Insperity Holdings Inc. 401(k) plan sold to Insperity clients.
Four participants in plans that were clients of Insperity, which provides outsourced human resources services, sued in December 2015 and filed an amended complaint in April 2016.
Insperity and subsidiaries were defendants in the lawsuit, but they aren't paying any of the settlement, according to a preliminary settlement document filed Oct. 12 in a U.S. District Court in Atlanta.
Insperity's own 401(k) plan is unaffected by the lawsuit or the settlement.
The plaintiffs alleged Insperity and its subsidiaries charged excessive record-keeping fees, among other complaints. They accused Reliance of making "imprudent" investment decisions, including selecting and retaining "its own high cost and poorly performing" investments, the original complaint said.
The preliminary settlement document noted that "after over four years of litigation, a two-week trial and protracted arm's-length negotiations with the assistance of a national mediator," the parties agreed to the settlement terms.
"In light of the litigation risks further prosecution of this action would inevitably entail, plaintiffs respectfully request" that the court approve the agreement in the case of Pledger et al. vs. Reliance Trust Co. et al.
The plaintiffs also had requested certain non-monetary terms, including removal of Reliance as the Insperity plan's discretionary trustee and "a competitive bidding process to select Reliance's replacement," the document said.
"Those non-monetary terms have been satisfied (or effectively satisfied) through changes that have occurred with respect to the plan," the document said. "Reliance no longer has any relationship with the plan."
Because these terms have been effectively satisfied, "it was not necessary for plaintiffs to demand additional non-monetary terms as part of the settlement with Reliance or seek further relief from the court," the document said.
"Defendants have denied and continue to deny the claims and contentions" made by the plaintiffs, the document said. "Defendants contend that they acted prudently and in keeping with their fiduciary responsibilities under ERISA."
