People who invest in their employer’s retirement plan must rely on the plan’s fiduciaries to make prudent and loyal choices of investments. This class action concerns the Quanta Services, Inc. 401(k) Savings Plan, bringing suit against Quanta Services, Inc., its Board of Trustees, and the savings plan’s administrative committee, alleging these defendants breached their fiduciary duties to the plan under the Employee Retirement Income Security Act (ERISA).
The class for this action is all participants and beneficiaries in the Quanta Services, Inc. 401(k) Savings Plan at any time between September 26, 2016 and the date of judgment in this case, or an earlier date as determined by the court, including any beneficiary of a deceased person who was a participant in the plan at any time during the class period.
Early on, the complaint points out that, with more than 16,000 participants and account balances and assets around $1.2 billion, the Quanta 401(k) is in the top 0.1% by size of defined contribution plans, with significant bargaining power for administrative and investment management services.
However, the complaint alleges that the defendants chose and retained high-cost and poorly performing investments, when more prudent ones were freely available to them.
The plan has fourteen target date funds (TDFs) from Fidelity Management & Research Company. TDFs gradually shift their underlying investments as a targeted retirement date nears. The complaint alleges, “Among its target date offerings, Fidelity offers the riskier and more costly Freedom funds (the ‘Active suite’) and the less risky and less costly Freedom Index funds (the ‘Index suite’).” The defendants chose the Active suite.
The complaint alleges that an adequate examination of the available “would have raised a significant red flag for prudent fiduciaries” and would have found “that the Active suite was not a suitable and prudent option for the Plan…”
The complaint claims that “the Active suite invests primarily in actively[-]managed funds Fidelity mutual funds,” and that it is “dramatically more expensive than the Index suite, and riskier in both its underlying holdings and its asset-allocation strategy.”
The complaint acknowledges that there is nothing inherent bad about actively-managed funds. However, when funds are actively managed, the complaint alleges, they risk costing investors in two ways: First, the active management may not provide better results than the passive management of index funds. Second, actively-managed funds cost more.
To help make up for this, the complaint alleges, “[t]he Active suite chases returns by taking higher levels of risk that render it unsuitable for the average retirement investor, including Plan participants.”
Even worse, the complaint claims that the Active suite was chosen as the retirement plan’s Qualified Default Investment Alternative (QDIA), for participants who don’t feel they can make their own investment choices.
The complaint alleges that the Active suite had high costs and performed inadequately.
Article Type: LawsuitTopic: Employment
Most Recent Case Event
Quanta Services Retirement Plan Breach of Fiduciary Duties ERISA Complaint
September 26, 2022
People who invest in their employer’s retirement plan must rely on the plan’s fiduciaries to make prudent and loyal choices of investments. This class action concerns the Quanta Services, Inc. 401(k) Savings Plan, bringing suit against Quanta Services, Inc., its Board of Trustees, and the savings plan’s administrative committee, alleging these defendants breached their fiduciary duties to the plan under the Employee Retirement Income Security Act (ERISA).
Quanta Services Retirement Plan Breach of Fiduciary Duties ERISA ComplaintCase Event History
Quanta Services Retirement Plan Breach of Fiduciary Duties ERISA Complaint
September 26, 2022
People who invest in their employer’s retirement plan must rely on the plan’s fiduciaries to make prudent and loyal choices of investments. This class action concerns the Quanta Services, Inc. 401(k) Savings Plan, bringing suit against Quanta Services, Inc., its Board of Trustees, and the savings plan’s administrative committee, alleging these defendants breached their fiduciary duties to the plan under the Employee Retirement Income Security Act (ERISA).
Quanta Services Retirement Plan Breach of Fiduciary Duties ERISA Complaint