ERISA stories
During the fourth quarter of 2019, 23 ERISA-related lawsuits were filed and/or updated. Each event represents the involved parties either reaching a settlement, filing an appeal or a court decision was made. The parties involved in the ERISA lawsuits in the fourth quarter included two insurance companies, three health-care-related firms, three universities, five financial firms, and prominent companies such as Intel Corporation and IBM.
Insurance companies
- The U.S. Supreme Court on Monday declined to hear a lawsuit alleging that Great-West Life & Annuity Insurance Co. violated ERISA in the management of a stable value fund.
- A Prudential Insurance Co. of America’s 401(k) plan participant has sued the company and fiduciaries for ERISA violations including self-dealing in the selection of investment options.
Health-care firms
- Teva Pharmaceuticals USA Inc.’s 401(k) participants have sued the company, directors and plan executives alleging violations of ERISA over fees and monitoring investments.
- U.S. District Judge in San Francisco has delayed the final approval of a class-action settlement with Dignity Health over its church plan status. With the proposed class settlement, Dignity Health must contribute $50 million in 2020 and $50 million in 2021.
- A proposed ERISA settlement has been reached between Allina Health System and its 401(k) and 403(b) plan participants, which requires Allina to pay $2.4 million to address breach-of-fiduciary-duty allegations.
Universities
- The University of Pennsylvania asked the U.S. Supreme Court to overturn a ruling by a federal appeals court, which supported claims by participants in a university 403(b) plan that alleged plan managers violated their fiduciary duties.
- The Massachusetts Institute of Technology has agreed to pay $18.1 million to settle allegations of ERISA violations against the university's 401(k) plan.
- A federal appeals court in New York has resurrected an ERISA lawsuit against Cammack LaRhette Advisors LLC, relating to its role as an investment adviser to a pair of 403(b) plans offered by New York University. Participants have argued that plan fiduciaries violated their duties under ERISA for excessive fees, poor-performing investments and failure to monitor co-fiduciaries.
Financial firms
- Federal government has favored Putnam’s 401(k) plan participants and asked the U.S. Supreme Court to decline the petition filed by Putnam Investments LLC, which seeked to overturn a ruling by the 1st U.S. Circuit Court of Appeals in Boston.
- A federal appeals court in San Francisco has denied a request for a rehearing in a case allowing Charles Schwab Corp. to compel arbitration in a dispute with a former employee over management of the company's 401(k) plan.
- Goldman Sachs Group Inc.’s 401(k) plan participant has sued the company and plan executives, alleging a series of ERISA violations ranging from excessive fees to inadequate monitoring of plan investments.
- A federal judge in New York dismissed a lawsuit filed by Morgan Stanley’s 401(k) plan participants, who asserted that plan fiduciaries violated their duties under ERISA by offering proprietary products and retaining some underperforming investment options.
- A federal judge in Atlanta has ordered a trial to resolve ERISA fiduciary breach claims by participants in a SunTrust Banks Inc. 401(k) plan against the company and plan fiduciaries. The trial was ordered after rejecting a SunTrust request for summary judgment against all eight ERISA claims made by the participants.
Other organizations
- Intel retirement plan participant filed a lawsuit alleging that plan managers violated ERISA obligations regarding alternative investments choices and investment disclosures. Supreme Court justices probed both sides of the ERISA breach lawsuit regarding sponsors' responsibilities for communicating investment lineup features and participants' responsibilities for understanding plan options.
- Supreme Court accepted an IBM petition to revisit a ruling in Fifth Third Bancorp et al. vs. Dudenhoeffer et al., which established a series of guidelines for lower courts to use in assessing stock-drop complaints.
Non-ERISA stories (by date order)
During the fourth quarter of 2019, 14 stories were written on non-ERISA lawsuits that involve legal prosecution or settlements; 55 legislation and regulation stories were written.
December
- MetLife will pay the Securities and Exchange Commission $10 million to settle charges for its failure to pay 13,500 participants in its group annuity population over the past 25 years due to insufficient administrative practices.
- The U.K. Parliament passed Prime Minister Boris Johnson's amended European Union withdrawal bill that formally takes the U.K. out of the EU on Jan. 31.
- The Senate voted 71-23 in favor of an eight-bill spending package, the SECURE Act, and the House approved the act by a vote of 297-120.
- Prime Minister Boris Johnson's Conservative Party has regained majority in the Parliament by defeating Jeremy Corbyn's Labour Party 364-203.
- German Finance Minister Olaf Scholz has proposed a 0.2% financial transaction tax directive to the ministers of the eurozone to gain support at a European Union level.
- Sen. Rand Paul proposed the Higher Education Loan Payment and Enhanced Retirement Act, the HELPER Act, to allow Americans to annually take up to $5,250 from a 401(k) or IRA — tax and penalty free — to pay for college or pay back student loans.
November
- The Federal Retirement Thrift Investment Board opposes a bipartisan Senate bill that would prevent it directing billions of dollars in retirement assets to an index fund that includes Chinese companies.
October
- American International Group Inc. shares slumped amid a report that the Securities and Exchange Commission is probing sales practices for retirement products at a unit that handles plans for school districts and universities.
- Malaysia has publicly demanded Goldman Sachs pay a $7.5 billion fine for its role in the 1MDB scandal. But privately, Malaysian negotiators have discussed figures of about $2 billion to $3 billion in talks with the bank.
- William "Bill" McGlashan Jr., a former top executive at TPG Growth and TPG's The Rise Fund, was charged along with 10 other parents involved in the college admissions scandal with conspiracy to commit federal program bribery.
- The Securities and Exchange Commission, Commodity Futures Trading Commission, Federal Deposit Insurance Corp. and Office of the Comptroller of the Currency have joined the Global Financial Innovation Network, an organization seeking to foster greater cooperation among financial authorities worldwide.
- China Securities Regulatory Commission said that foreign-ownership limits on mainland-based fund management companies serving local retail investors will be eliminated as of April 1.
- Five federal financial regulatory agencies announced approved changes to the Volcker rule to provide relief to financial institutions.
