Q3 2020 legal overview report

During the third quarter of 2020, 45 ERISA-related lawsuits were filed and/or updated. Each event 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 third quarter included three financial firms, three health-care-related firms, two universities, and prominent companies such as MGM Resorts International, Duke Energy Corp., LinkedIn Corp., NVIDIA Corp., American Airlines Inc., Northrop Grumman Corp. and Koch Industries, with IBM’s case reviewed by the U.S. Supreme Court.

• The 8th U.S. Circuit Court of Appeals in St. Louis upheld a U.S. District Court's dismissal of a stock-drop lawsuit against Wells Fargo & Co. and its fiduciaries. Wells Fargo 401(k) plan participants claimed that the banking scandal exposed in September 2016 caused the company's stock price to drop and their interests were harmed.
• A U.S. District Court judge refused to dismiss an ERISA lawsuit against Goldman Sachs where 401(k) plan participants alleged that the company and its fiduciaries violated ERISA duties by charging excessive fees and failing to monitor investments adequately.
• Fidelity Investments will pay $28.5 million to settle an ERISA lawsuit against the company and its fiduciaries for investments in proprietary products and failure to seek lower-price alternatives.

• OSF Healthcare System agreed to settle for $25 million after the 7th U.S. Circuit Court of Appeals in Chicago reversed a U.S. District Court’s ruling to grant motion for summary judgment. Plan participant accused that the plan misused the religious exemption to underfund its pension plans.
• Biogen 401(k) plan participants filed an ERISA lawsuit against the company and its fiduciaries alleging that the plan charged excessive fees, and failed to reduce plan expenses and maintain a prudent investment lineup.
• Mercy Health Corp. 401(k) plan participants sued the company and its fiduciaries for charging excessive fees and failure to maintain a prudent investment lineup.

• Cornell University agreed to pay $225,000 to settle an ERISA lawsuit filed by 403(b) plan participants alleging that the plan charged excessive fees and maintained high-cost but poor-performing investment options.
• The trustees of Princeton University agreed to pay $5.8 million to settle an ERISA complaint filed by a participant in two university 403(b) plans who claimed that the plan charged excessive fees and used revenue-sharing with record keepers TIAA-CREF and Vanguard Group.

• IBM asked the U.S. Supreme Court to overturn a ruling that favored 401(k) plan participants made by a New York federal appeals court. The participants claimed they were harmed when company stock fell due to IBM’s asset write-down and subsequent sale of a money-losing microelectronics unit.
• MGM Resorts International 401(k) plan participants sued the company and its fiduciaries alleging that they failed to maintain a prudent investment lineup.
• A U.S. District Court judge rejected The Home Depot Inc.’s request for summary judgment; 401(k) plan participants claimed that the company and its fiduciaries allowed excessive fees for investment advisory services and failed to monitor fiduciaries.
• Duke Energy Corp. 401(k) plan participants sued the company and its fiduciaries for excessive fees charged.
• NVIDIA Corp. 401(k) plan participants sued the company and its fiduciaries claiming that they failed to properly monitor the investment options.
• LinkedIn Corp. 401(k) plan participants sued the company and its fiduciaries alleging that they failed to properly monitor the investment options as well as their costs and performance.
• McKinsey & Co. agreed to pay $39.5 million to settle an ERISA lawsuit against the company and its fiduciaries for charging excessive fees.
• A U.S. District Court Judge rejected claims by American Airlines Inc. 401(k) plan participants that the plan failed to maintain a prudent investment lineup.
• Koch Industries was sued for charging excessive fees to its 401(k) and other defined contribution plan participants.
• A U.S. District Court judge rejected the $12.4 million proposed settlement of an ERISA complaint against Northrop Grumman Corp., claiming that the proposed release of liability in agreement is impermissible. Plan participants alleged that the plan charged excessive fees and failed to maintain a prudent investment lineup.

During the third quarter, 21 stories were written on non-ERISA lawsuits that involve legal prosecution or settlements, and an additional 37 legislation and regulation stories were written.

• J.P. Morgan Chase & Co. agreed to pay $920 million to settle federal charges of trading manipulation with the Department of Justice for U.S. Treasury and precious metals trades made between 2008 and 2016.
• Alphabet Inc. agreed to settle a shareholder lawsuit filed by two union pension funds alleging that the company covered up a data breach and allegations of sexual harassment and discrimination. The settlement includes $310 million for diversity initiatives.
• Marble Ridge founder Dan Kamensky was charged with securities fraud and obstruction of justice for pressuring Jefferies Financial Group to drop Neiman Marcus Group bid.
• The American Securities Association withdrew its lawsuit against the Securities and Exchange Commission after being requested to remove certain personal information from CAT collection requirements.
• The Senate Homeland Security and Governmental Affairs Committee approved the nominations of Christopher Bancroft Burnham, Frank Dunlevy and John M. Barger to join the Federal Retirement Thrift Investment Board.

• Former CalPERS CIO Yu "Ben" Meng was sued for failing to properly disclose certain personal investments and sales of stocks and other holdings.
• New York state Comptroller Thomas P. DiNapoli and the Colorado Fire & Police Pension Association sued Boeing Co. and its fiduciaries for lack of quality control, which led to flawed design of Boeing's 737 Max airplane.
• Several New York members of Congress have asked the state's attorney general to investigate potential insider trading and price manipulations of Puerto Rico bonds by New York-based hedge funds.
• Allianz Global Investors received requests from the Securities and Exchange Commission regarding its structured alpha funds due to the recent lawsuit filed by Arkansas Teacher Retirement System, which alleged that the money manager improperly invested the pension fund's assets in three enhanced-return strategies.

• Crispin Odey, one of Europe's highest-profile hedge fund managers, was charged under the Sexual Offenses Act.
• VALIC Financial Advisors agreed to pay $40 million to settle charges with SEC for its failure to disclose conflicts of interest and millions of dollars in fees that were generated.
• Goldman Sachs reached a $3.9 billion settlement on the troubled sovereign wealth fund 1MDB so that all criminal and regulatory proceedings would be dropped in Malaysia.
• The Kentucky Supreme Court upheld a court of appeals' dismissal of a lawsuit alleging breach of trust and fiduciary duties against Blackstone Group, Prisma Capital Partners, KKR & Co. and Pacific Alternative Asset Management Co. Members of Kentucky Retirement Systems claimed that KRS earned less returns with defendants’ fund-of-funds investment vehicles than market returns.
• City of Grand Rapids General Retirement System and City of Grand Rapids Police & Fire Retirement System filed a class-action lawsuit against Bayer claiming that the company deceived investors by concealing material information and making misleading statements during its acquisition of Monsanto.
• Sara Vavra and Shannon Gitlin filed discrimination claims against Point72 Asset Management with the Connecticut Commission on Human Rights and Opportunities.
• Mississippi Public Employees' Retirement System filed a securities class-action lawsuit against Mylan and its senior executives, alleging that the company’s materially false statements caused significant investment losses.
• Lawrence Minicone and Zachary Squire were sued by Bridgewater Associates for misappropriating trade secrets, breach of contract and unfair competition and the firm lost the lawsuit.
• Deutsche Bank agreed to pay $150 million in penalties in connection with its relationship with Jeffrey Epstein, Danske Bank Estonia and FBME Bank.
• The Addressing Missed-savings Opportunities for Retirement due to an Epidemic Act, or AMORE Act, would permit individuals to make catch-up 2020 contributions to their retirement accounts in 2021 and 2022.
• The House of Representatives passed a $1.5 trillion infrastructure package with H.R. 2, the Moving Forward Act to address issues regarding roads, public housing, broadband and more.