ERISA stories
During the first quarter of 2021, 30 ERISA-related lawsuits were filed and/or updated. Each instance represents the involved parties either reaching a settlement or filing an appeal, or a court decision was made. The parties involved in the ERISA lawsuits in the first quarter included 10 financial firms, two health care-related firms, two universities, and prominent companies such as Johnson & Johnson, Raytheon Co., General Electric Co., Intel Corp., Mercedes-Benz U.S. International Inc., and IBM, whose case was reviewed by the U.S. Supreme Court.
President Joe Biden nominated Marty Walsh as labor secretary, Julie Su as deputy secretary of labor, Hester M. Peirce as an SEC commissioner and Janet Yellen as treasury secretary.
Financial firms
- Wells Fargo & Co. 401(k) plan participants petitioned the U.S. Supreme Court to overturn pro-company rulings by lower courts. Participants claimed that plan fiduciaries failed to protect their investments in company stock due to a sales-practices scandal and penalties against the company.
- A New York Life Insurance Co. 401(k) plan participant filed a lawsuit against its fiduciaries, alleging they violated ERISA duties by offering proprietary products at the expense of the retirement savings, including default investments in an insurance fund called Fixed Dollar Account.
- A federal appeals court has upheld a lower court's dismissal of an ERISA complaint against FMR LLC and several FMR affiliates. Participants claimed that Fidelity charged secret fees for investments offered in the Fidelity FundsNetwork.
- A federal judge rejected the second petition by BBVA Compass Bancshares to dismiss an ERISA complaint filed by its participants who claimed that fiduciaries chose higher cost investments.
- Principal Life Insurance Co. 401(k) plan participants sued the company and its fiduciaries for offering underperforming proprietary products and charging high fees.
- Natixis Investment Managers 401(k) plan participants sued the company and its fiduciaries for offering expensive proprietary products.
- T. Rowe Price Group 401(k) plan participants sued the company and its fiduciaries for self-dealing and offering proprietary products at the expense of the retirement savings.
- Associated Banc-Corp 401(k) plan participants sued the company and its fiduciaries for failure to maintain a prudent investment lineup.
- BlackRock 401(k) plan participants sued the company and its fiduciaries for offering underperforming and expensive investment options. BlackRock's petition for summary judgment was rejected.
- Allstate Corp. 401(k) plan participants sued the company and its fiduciaries for offering poor-performing target-date funds called Northern Trust Focus Retirement Trusts.
Health-care organizations
- An ERISA claim against Abbott Laboratories and its fiduciaries was dismissed again. A participant alleged that an imposter transferred funds out of her retirement account, and Abbott Laboratories and record keeper Alight Solutions breached their fiduciaries based on the duties of prudence and monitoring.
- Takeda Pharmaceuticals 401(k) plan participants alleged that plan fiduciaries violated ERISA by offering a target-date fund lineup.
Universities
- An appeals court asked a lower court to consider whether Georgetown University 403(b) plan participants should be allowed to amend their original complaint. Participants alleged that fiduciaries kept too many record keepers and poor-performing options.
- University of Pennsylvania agreed to pay $13 million to settle an ERISA complaint filed by university 403(b) plan participants for charging excessive fees.
Other organizations
- After getting U.S. Supreme Court involved, IBM reached a settlement with its 401(k) plan participants, who had claimed that their investments in IBM stocks suffered a huge loss due to IBM’s asset write-down and sale of a money-losing unit.
- An ERISA complaint filed by Johnson & Johnson 401(k) plan participants alleging that fiduciaries failed to protect their investments in company stock was dismissed.
- Raytheon Co. agreed to pay $59.2 million to settle an ERISA complaint against the company and fiduciaries for improperly calculating retirement benefits.
- An appeals court upheld a lower court's dismissal of an ERISA lawsuit against General Electric Co. 401(k) plan fiduciaries for improperly manipulating GE's earnings and a GE stock fund.
- An ERISA claim against Intel Corp. and its fiduciaries for offering expensive and poor-performing investments was dismissed.
- Mercedes-Benz U.S. International Inc. 401(k) plan participants filed a lawsuit against the company and its fiduciaries for charging excessive fees.
Non-ERISA stories
During the first quarter of 2021, 16 stories were written on non-ERISA lawsuits that involved legal prosecutions or settlements, and an additional 66 legislation and regulation stories were written.
March
- Arkansas Teacher Retirement System, West Virginia Investment Management Board and Plumbers & Pipefitters National Pension Fund filed a class-action lawsuit against Goldman Sachs Group for information misrepresentations during the subprime mortgage crisis. Goldman Sachs petitioned for Supreme Court review.
- The Senate confirmed Wally Adeyemo as deputy secretary of treasury.
- President Joe Biden signed the $1.9 trillion American Rescue Plan to promote more vaccinations, assign immediate relief and the creation of an $86 billion federal assistance program to offer funding for pension plans.
- Hedge fund firm chief Crispin Odey obtained a not-guilty verdict for his sexual harassment case.
- Pacific Investment Management Co. LLC denied claims of gender and pay discrimination, harassment and retaliation in California Superior Court.
- Greensill Capital filed for insolvency in the U.K. due to backers’ concerns toward its debt issue. Credit Suisse Group started to liquidate $10 billion of Greensill funds, and Softbank's Vision fund wrote down its $1.5 billion holding in Greensill.
February
- Golub Capital and Sixth Street Partners sued Dyal Capital separately for its merger with Owl Rock and a blank-check company backed by HPS Investment Partners to form Blue Owl. Golub and Sixth Street compete with HPS and Owl Rock, and they have sold ownership stakes to Dyal previously.
- Financial Oversight and Management Board reached a proposed settlement with bondholders to cut to Puerto Rico’s $18.8 billion debt to $7.4 billion if a deal is finalized.
- H.I.G. Group agreed to pay £25 million ($35 million) to settle with Silentnight Group DB Scheme for allowing Silentnight Group to become unnecessarily insolvent, causing the pension fund to fall into an assessment period for the Pension Protection Fund and H.I.G. Capital then bought the business out of administration.
- General Motors Co. agreed to pay $5.8 million for making false and misleading statements to investors.
- The Senate Health, Education, Labor and Pensions Committee approved the nomination of Marty Walsh as labor secretary.
- Julie Su was nominated by President Joe Biden as deputy secretary of labor.
- Pension Schemes Act 2021 received royal approval and the bill establishes new powers for The Pensions Regulator to impose criminal and civil sanctions on company directors.
- American International Group Inc. agreed to pay a $12 million penalty to New York state for soliciting and completing four unauthorized pension risk transfer transactions.
- President Joe Biden nominated former chairman of the Commodity Futures Trading Commission Hester M. Peirce as an SEC commissioner.
January
- The Senate Finance Committee approved the nomination of Janet Yellen as treasury secretary.
- Rostin Behnam was appointed as acting chairman of the Commodity Futures Trading Commission.
