The complaint for this class action alleges that Bessemer Trust Company and its Profit Sharing Plan Committee have breached their duties of prudence and loyalty and have not managed the company’s profit sharing plan in the best interests of the participants. Instead, the complaint alleges, they have engaged in self-dealing, “using the Plan as an opportunity to promote Bessemer Trust’s Old Westbury mutual fund business and maximize profits in lieu of participants’ best interests.” The complaint brings suit under the Employee Retirement Income Security Act (ERISA).
The class for this action is all participants and beneficiaries of the Bessemer Trust Company 401(k) and Profit Sharing Plan invested in funds managed by Bessemer Trust Company or its affiliates, at any time on or after January 26, 2016.
The complaint alleges that 401(k) and similar retirement plans have a greater potential for disloyalty and imprudence on that part of the fiduciaries: “because all risks related to high fees and poorly performing investments are borne by participants, the sponsor has no direct stake in keeping costs low or closely monitoring the plan to ensure every investment remains prudent.”
Bessemer Trust is the advisor to the Old Westbury mutual funds via its subsidiary Bessemer Investment Management, LLC. This means, the complaint says, that Bessemer benefits by selecting the Old Westbury funds as investment options in the retirement plan.
The complaint alleges that the questionable quality of that choice is evident in “a simple comparison to other similarly sized plans. Among all plans with at least $100 million in assets, no plan other than the Plan [at issue in this case] is invested in a single Old Westbury fund.”
According to the complaint, Bessemer has “not passed up a single opportunity to self-deal in the Plan: the only non-Old Westbury options in the plan represent 401(k)-staple asset classes or investment styles for which Old Westbury does not maintain a proprietary offering.”
For plans of a similar amount in assets, the complaint alleges, “the average asset-weighted total plan cost is between 0.42% and 0.47%. In contrast, the Plan’s total costs were approximately two times higher, ranging from 0.73% to 0.99%…” It adds, “The Plan’s excessive fees are entirely due to its concentration of proprietary funds, which, on average, account for over 98% of the Plan’s investment expenses.”
The complaint also alleges that some of the Old Westbury funds are underperforming: “For example, the Old Westbury Large Cap Strategies fund, the Plan’s largest holding, trailed its benchmark by a staggering 6.40% per year over the five-year period ending 2020.”
The company also did not consider non-Old Westbury funds when it added funds, the complaint claims.
The complaint refers to previous court cases, alleging they have held that this kind of conduct is enough to state a claim of breach of fiduciary duty. The complaint alleges that Bessemer’s conduct has “cost[] participants millions of dollars in excess fees and investment underperformance.”
Article Type: LawsuitTopic: Employment
Most Recent Case Event
Bessemer Profit Sharing Plan Self-Dealing Complaint
January 26, 2022
The complaint for this class action alleges that Bessemer Trust Company and its Profit Sharing Plan Committee have breached their duties of prudence and loyalty and have not managed the company’s profit sharing plan in the best interests of the participants. Instead, the complaint alleges, they have engaged in self-dealing, “using the Plan as an opportunity to promote Bessemer Trust’s Old Westbury mutual fund business and maximize profits in lieu of participants’ best interests.” The complaint brings suit under the Employee Retirement Income Security Act (ERISA).
Bessemer Profit Sharing Plan Self-Dealing ComplaintCase Event History
Bessemer Profit Sharing Plan Self-Dealing Complaint
January 26, 2022
The complaint for this class action alleges that Bessemer Trust Company and its Profit Sharing Plan Committee have breached their duties of prudence and loyalty and have not managed the company’s profit sharing plan in the best interests of the participants. Instead, the complaint alleges, they have engaged in self-dealing, “using the Plan as an opportunity to promote Bessemer Trust’s Old Westbury mutual fund business and maximize profits in lieu of participants’ best interests.” The complaint brings suit under the Employee Retirement Income Security Act (ERISA).
Bessemer Profit Sharing Plan Self-Dealing Complaint