De Paola Trading Profit Sharing Plan Distributions Class Action

De Paola Trading, Inc., a broker-dealer, offers a Profit Sharing Plan, an employee benefit plan to which the company contributes. De Paola and its president and CEO, Peter de Paola, are the defendants in this class action. The complaint claims they have breached their fiduciary duties to the plan and violated the Employee Retirement Income Security Act (ERISA), which governs such employer-provided retirement plans.

The class for this action is

• All persons currently employed by De Paola Trading who have account balances in the company’s profit sharing plan, other than Peter De Paola, and
• All persons formerly employed by De Paola Trading who were totally or partially vested in the plan account balances when their employment with De Paola terminated, whether or not they have received a distribution from the plan.

The De Paola plan was established in January 2007 and amended in January 2015. The complaint alleges, “all investment decisions for the Profit Sharing Plan are the responsibility of De Paola in his capacity as the Trustee and/or the Investment Fiduciary.”

The plaintiff in this case, Bryan Jaeger, began working for De Paola in 2007 and was 100% vested in his account when he left the company in March 2020. Jaeger, the complaint alleges, was entitled to receive the proceeds of his account at that time.

However, the complaint alleges that when he tried to obtain a claim form, “De Paola was evasive, said things were complicated and that it would take time.” After a time with no response, Jaeger contacted the Department of Labor (DOL) for help. He eventually received a distribution of more than $90,000 in January 2021.

The complaint claims that the DOL investigator later said that other participants were also not getting their benefits, and that De Paola had cooperated at first, providing Jaeger’s distribution, but had since stopped.

Eventually, a formal DOL investigation was opened, but the complaint alleges that even so, De Paola had not been cooperating: “For example, De Paola had been requested to retain an actuary to [ensure] that Plan participants were receiving the correct amount of benefits but De Paola had refused.”

The complaint alleges that De Paola has not complied with ERISA requirements, including the requirement to provide participants with a summary annual report, and the requirements that plan fiduciaries act in the sole interest of participants and exercise a prudent standard of care.

Charts in the complaint compare the performance of the plan as may be seen from its Form 5500 filings with the performance of three Vanguard investment funds. The Vanguard funds did significantly better. No Form 5500 has been filed for the year 2020, although the deadline date for that passed months ago.

The complaint alleges, “upon information and belief,” that Jaeger’s “Plan benefit was based on a December 31, 2019 Valuation Date rather than a December 31, 2020 Valuation Date.” It claims, “Had [Jaeger] not improperly been denied earnings for 2020, his benefit amount would have been substantially higher.”

Article Type: Lawsuit
Topic: Employment
Tags: Compliance, Delay in Payment of Benefits Due, ERISA, Incomplete payment of benefits due, Retirement Plans