Exelon Retirement Plan Breach of Fiduciary Duties ERISA Class Action

Exelon Corporation generates energy, then sells or distributes it. This class action brings suit against the company, its Board of Directors, its corporate investment committee, and various individuals, alleging that these defendants breached their fiduciary duties of prudence and loyalty to the Exelon Corporation Employee Savings Plan, a retirement plan governed by the Employee Retirement Income Savings Act (ERISA). The complaint alleges that these breaches have cost plan participants “millions of dollars” as well as violating the law.

The class for this action is all persons who were participants in or beneficiaries of the Exelon Corporation Employee Savings Plan, at any time between December 6, 2015 and the date of judgment in this case.

Employees of Exelon and of its subsidiaries may participate in the plan. Participants who do not choose specific investment options will have their contributions invested in a Target Date Fund option based on the year of their birth and the assumption they will retire at age 61.

Fiduciaries of retirement plans are supposed to manage and administer the plans only in the interests of the participants and beneficiaries. They owe them the duties of prudence and loyalty.

The complaint makes a number of allegations against the defendants in this case. First, it alleges that they chose and maintained investment options that cost participants more and that delivered worse performance than other, similar alternatives that were available.

Each investment option charges management fees. The complaint alleges that, “as described by the Department of Labor, a one percent difference in fees and expenses can reduce a participant’s retirement account balance by 28 percent over 35 years.” Plan fiduciaries must make sure that the costs of their investment options are reasonable. They must also monitor the performance of the investment options and remove or replace options that do not perform well. The complaint shows bar graphs to compare performance.

Second, the complaint claims that the defendants paid excessive fees for recordkeeping and other administrative services for the plan as a whole. Large plans, like the one at issue, make possible economies of scale, so that they can ask for bids to get lower per-participant prices. The complaint contains tables that show what the plan was paying and comparing it to what other plans were paying.

Finally, the complaint claimed that the defendants allowed a third-party consultant to charge the plan high fees for advisory services. It alleges that the advisor kept the fees or shared them with another service provider.

The complaint alleges that these breaches of fiduciary duties caused the plan to lose millions of dollars in value over the class period.

Article Type: Lawsuit
Topic: Employment
Tags: Breach of Fiduciary Duty, ERISA, Employment Violations, Retirement Plans