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401(k) Fee Suits on the Rise [By Anique Gonzalez] Following the surging trend of employees filing lawsuits against their employers, employers have yet another reason to be wary: 401(k) plans. Recently, fees associated with 401(k) plans have come under close scrutiny and are resulting in mounting lawsuits against small and large corporations alike.

The timing of the suits, whether planned or

question were “excessive,” “unreasonable,”

information associated with 401(k) fees

not, coincides with investigations by three

or related to “revenue sharing.”

charged to employees. Moreover, the legal

federal entities: the U.S. Department of

pressure on such companies continues to

Labor, the U.S. Securities and Exchange

However, Schlichter Bogard is not the

mount. Three months ago, for instance,

Commission, and a congressional

only firm filing suits. Keller Rohrback and

financial experts appeared before a

committee. These inspections are looking

McTigue & Porter have also filed similar

congressional hearing related to excessive

into the fees employees must pay for

claims against major corporations such

401(k) fees.

401(k) plans, mutual funds, annuities, and

as ING Life Insurance Annuity Company,

other retirement programs, as well as the

General Motors Corporation, and Radio

Thus far, the likely outcome of these cases

accessibility of the information associated

Shack Corporation. These claims not only

is unclear. What is clear, though, is this: if

with those fees. Interestingly, some suits

address the availability of fee information but

401(k) suits are increasingly found in favor

are even going after employees who are

also whether offering plans with excessive

of employees, the number of lawsuits filed

aware of excessive fees but choose to

fees is in the best interest of the employee.

will drastically rise and the landscape of

participate in such plans anyway.

401(k) and associated retirement plans will The majority of the suits filed by Schlichter

dramatically be altered by companies and

Starting in the fall of 2006, Schlichter,

Bogard have been able to withstand motion-

the government alike.

Bogard & Denton began filing class action

to-dismiss claims filed by the defendants,

lawsuits claiming the companies they filed

although not all claims have been found

against, including The Boeing Company,

in the firm’s favor. A case against Exelon

Kraft Foods, Inc., and Bechtel Group,

Corporation, for example, was dismissed after

Schlichter, Bogard & Denton

Inc., did not act in good faith. Namely,

a judge found that there were no unwarranted

they allegedly permitted intermediaries

fees associated with the company’s 401(k)

to charge employees unnamed and often

plan. Additionally, in another claim, a federal

U.S. Department of Labor

excessive fees in relation to their 401(k)

judge rejected defendants in a case against

plans. Thus far, Schlichter Bogard has filed

Northrop Grumman. U.S. Government Accountability Office

13 suits in all. It is likely the number of suits will continue The claims have been filed under ERISA,

to grow in the coming years. The U.S.

the Employee Retirement Income Security

Government Accountability Office released

Act of 1974, which the firm believes will

a report stating that increasingly mutual

substantiate the allegations that the fees in

fund companies do not properly divulge


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401(k) Fee Suits on the Rise  

The legal pressure on such companies continues to mount. Three months ago, for instance, financial experts appeared before a congressional h...

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