Did Nova Southeastern University, Inc. breach its fiduciary duties in its management of the University’s 401(k) plan for its faculty and staff? The complaint alleges that the university chose investments with poor performance and high-cost share classes, and paid excessive fees for recordkeeping and administration.
The class for this action is all persons who were participants in or beneficiaries of the plan at any time between June 15, 2016 and the present.
Fiduciaries for retirement plans have the duties of prudence and loyalty under the Employee Retirement Income Security Act of 1974 (ERISA). The complaint quotes the law as saying that fiduciaries for retirement plans must act “solely in the interest of the participants and beneficiaries,” using the “care, skill, prudence, and diligence” that are expected in managing such plans.
The complaint faults the fiduciaries of the retirement plan in a number of ways:
Choosing more expensive share classes. Mutual funds offer different classes of shares that have different associated costs. Share classes with lower costs may require a larger minimum purchase of shares, but these kinds of requirements may be waived for retirement plans. The complaint displays a chart of the funds in the plan, their expense ratios, and lower cost share classes of the same funds with lower expense ratios.
Choosing investments that had higher costs and performed poorly. The complaint alleges, “Throughout the class period, the Plan’s investment options have been dominated by high-cost, actively-managed funds, despite the fact that these funds charged grossly excessive fees compared with alternative funds that used the same investment style, and despite ample evidence available to a reasonable fiduciary that such funds had become imprudent due to their high costs.”
The complaint also points out that the all of the funds were issued by the two recordkeepers, TIAA and VALIC, who are compensated from participants’ investments in their plans. It claims that TIAA and VALIC were permitted “to freight the Plan’s entire investment menu with investments that generate excessive fees for TIAA and VALIC at the direct expense of Plan participants.”
Failing to monitor the plan’s recordkeeping and administrative expenses. Recordkeepers offer a broad range of services to plans and are willing to compete on price, the complaint alleges. The complaint alleges that the plan’s fiduciaries paid the recordkeepers compensation that was excessive and unreasonably high when looked at on a per-participant basis.
The complaint makes two claims for relief: breaches of the fiduciary duty of prudence and failure to adequately monitor other fiduciaries and service providers.
Article Type: LawsuitTopic: Employment
Most Recent Case Event
Nova Southeastern University 401(k) Breach of Fiduciary Duties Complaint
June 16, 2022
Did Nova Southeastern University, Inc. breach its fiduciary duties in its management of the University’s 401(k) plan for its faculty and staff? The complaint alleges that the university chose investments with poor performance and high-cost share classes, and paid excessive fees for recordkeeping and administration.
Nova Southeastern University 401(k) Breach of Fiduciary Duties ComplaintCase Event History
Nova Southeastern University 401(k) Breach of Fiduciary Duties Complaint
June 16, 2022
Did Nova Southeastern University, Inc. breach its fiduciary duties in its management of the University’s 401(k) plan for its faculty and staff? The complaint alleges that the university chose investments with poor performance and high-cost share classes, and paid excessive fees for recordkeeping and administration.
Nova Southeastern University 401(k) Breach of Fiduciary Duties Complaint