In district court in Los Angeles, CA, plaintiffs are suing Pacific Investment Management Co., Allianz Global Investors, and parent company Allianz Asset Management for breach of fiduciary duty. The plaintiffs in the class action lawsuit contend that the fiduciaries of the Allianz Asset Management of America 401(k) Savings and Retirement Plan, which is the plan in which they are participants, violated their duty of prudence and loyalty under ERISA by placing a lot of high-priced proprietary funds in the plan’s core menu for investments.
The lead plaintiffs in the 401(K) lawsuit are Nathan Marfice and Aleksandr Urakhchin. They contend that the all-in plan costs are at 77 basis points, which was 75 basis points above the average retirement plan that holds anywhere from $500 million and $1 billion in assets. They said that this cost plan participants more than $2.5 million in excessive fees.
A spokesperson for Allianz says the class action case has no merit. Other parties listed as defendants include:
· The committee of the Allianz Asset Management of America 401(k) plan
· Allianz Asset Management of America LP
· Allianz Global Investors Fund Management
· Allianz Asset Management of America
This is not the first 401(k) lawsuit against asset managers alleging excess fees. Fidelity Investments (FNF) settled two lawsuits for $12 million in 2014. Ameriprise (AMP), in the case against it, consented to pay $27.5 million. Lawsuits are pending against Principal Financial Group and Transamerica Corp. parent company Aegon. Massachusetts Mutual Life Insurance Company. BB & T Corp. was sued in a 40k(k) lawsuit last month. In August, Boeing also settled a 401(K) lawsuit alleging excessive fees.
And its not just asset managers that are having to settle. Earlier this year, Lockheed Martin Corp. consented to pay $62M to resolve a securities lawsuit accusing the company of charging 401k participants excessive fees. Plaintiffs accused Lockheed of being imprudent when managing employee retirement savings funds. The company settled while denying the allegations.
Numerous cases have been brought accusing companies of not acting in employees’ best interest as it pertains to 401(k) plans. Allegations have included a failure to monitor excessive fees, directing employee savings toward affiliate-overseen investment products, and favoring more expensive retail mutual funds over alternatives that are not as costly.
Contact The SSEK Partner Group if you suspect that your investment losses are due to securities fraud.
Allianz, Pimco targeted in class-action 401(k) suit, InvestmentNews, October 12, 2015
401K Fees in the Spotlight, With $62M Lockheed Settlement & Edison Class Action Case Before the Supreme Court, Stockbroker Fraud Blog, February 24, 2015
Boeing settles 401(k) lawsuit, St. Louis Post-Dispatch, August 28, 2015