Nvidia 401(k) Plan Breach of Fiduciary Duties Class Action

Companies appoint various parties to manage and be responsible for the 401(k) plans for their employees. These people act as fiduciaries and are required under the Employee Retirement Income and Security Act of 1974 (ERISA) to carry out the fiduciary duties of loyalty and prudence. In this class action, the complaint claims that fiduciaries of the Nvidia Corporation 401(k) plan (Nvidia Corporation, the Board of Directors and its members during the class period, and the 401(k) Benefits Plan Committee and its members during the class period) did not do so.

The class for this action is all persons who were participants in or beneficiaries of the Nvidia 401(k) plan, at any time between August 28, 2014 and the date of judgment in this case. The defendants in this case and their immediate family members are excluded from this class.

Fiduciaries of such retirement plans must act “solely in the interest of the participants and beneficiaries,” the complaint says, quoting the law, and they must act with the “care, skill, prudence, and diligence” expected in the management of similar plans. The complaint quotes an earlier case as saying that these two fiduciary duties are “the highest known to the law.”

The complaint quotes the Uniform Prudent Investor Act (UPIA) as saying, “Wasting beneficiaries’ money is imprudent. In devising and implementing strategies for the investment and management of trust assets, trustees are obligated to minimize costs.”

These concerns should be applied not only in choosing investment options for the 401(k) plan but also in monitoring and periodically reviewing them, and getting rid of options that are underperforming.

As to the costs and fees of plans, although they may seem small, their effect may be large over time. This is because participants not only lose the amounts paid in fees but also the money those amounts would have earned if they had been retained and invested over a number of years.

At all times during the class period, the Nvidia 401(k) plan had at least $517 million in assets. This qualifies it as a large plan. The complaint claims, “As a large plan, the Plan had substantial bargaining power regarding the fees and expenses that were charged against participants’ investments. [The parties named as fiduciaries], however, did not try to reduce the Plan’s expenses or exercise appropriate judgment to scrutinize each investment option that was offered in the Plan to ensure it was prudent.”

In fact, the complaint alleges, the fiduciaries (1) did not ensure that each investment option was prudent, in terms of cost, and (2) kept certain investment options in the plan, even though identical or similar ones were available with lower costs or better past performance. In some cases, it says, the fiduciaries did not select the lowest-cost share classes for mutual funds and did not consider certain collective trusts as alternatives to the mutual funds in the plans, even when they had similar investment objectives and lower costs.

Article Type: Lawsuit
Topic: Investments

Most Recent Case Event

Nvidia 401(k) Plan Breach of Fiduciary Duties Complaint

August 28, 2020

Companies appoint various parties to manage and be responsible for the 401(k) plans for their employees. These people act as fiduciaries and are required under the Employee Retirement Income and Security Act of 1974 (ERISA) to carry out the fiduciary duties of loyalty and prudence. In this class action, the complaint claims that fiduciaries of the Nvidia Corporation 401(k) plan (Nvidia Corporation, the Board of Directors and its members during the class period, and the 401(k) Benefits Plan Committee and its members during the class period) did not do so.

Nvidia 401(k) Plan Breach of Fiduciary Duties Complaint

Case Event History

Nvidia 401(k) Plan Breach of Fiduciary Duties Complaint

August 28, 2020

Companies appoint various parties to manage and be responsible for the 401(k) plans for their employees. These people act as fiduciaries and are required under the Employee Retirement Income and Security Act of 1974 (ERISA) to carry out the fiduciary duties of loyalty and prudence. In this class action, the complaint claims that fiduciaries of the Nvidia Corporation 401(k) plan (Nvidia Corporation, the Board of Directors and its members during the class period, and the 401(k) Benefits Plan Committee and its members during the class period) did not do so.

Nvidia 401(k) Plan Breach of Fiduciary Duties Complaint
Tags: Breach of Fiduciary Duty, ERISA Violations, Employment Violations, Retirement Plan Mismanagement, Retirement Plans