401(k) Mismanagement

For countless Americans, the promise of a secure retirement rests on their 401(k) plans. These...

As the Employee Retirement Income Security Act of 1974 turns 50, the federal statute known as...

is conducting an investigation to determine if Capital Group has...

The overall operations of a mutual fund are under the supervision and authority of a board of...

Another important data point for mutual funds is their investment performance, both absolute and...

Information describing the mutual fund is disclosed to investors in a legal document known as a...

Mutual Fund Fees and Expenses Just as important as the information on investment objective,...

Federal Claims Against Milliman, Inc. Employers offer a number of employee benefits to attract and retain their workforce. One of those very important employee benefits is a retirement savings plan known the 401(k) plan. The Employee Retirement Income Security Act (“ERISA”) is a federal law that governs how employers are to manage their 401(k) plan. It imposes strict fiduciary duties of prudence and loyalty upon employers. ERISA’s duty of prudence requires fiduciaries to discharge their responsibilities “with the care, skill, prudence, and diligence” that a prudent person “acting in a like capacity and familiar with such matters would use.” ERISA’s duty of loyalty requires a fiduciary to “discharge his duties with respect to a plan solely in the interest of the participants and beneficiaries and for the exclusive purpose of: (i) providing benefits to participants and their beneficiaries; and (ii) defraying reasonable expenses of administering the plan.” The courts have said that these duties must be performed “with an eye single” to the interests of participants. Companies that fail to honor these sacred duties can have a significant adverse impact on the retirement savings of their employees. has brought numerous class action lawsuits against companies that have violated their duties. […]

In the news lately, there have been reports of pension plans fighting back against investment advisers accused of breaching their duties of prudence and loyalty, in one case securing a settlement with their investment adviser for $642 million. In the public sector, at least 25 investor lawsuits, predominantly by U.S. public pension funds, including those for Arkansas teachers, New York subway workers, and City of Milwaukee employees, have been filed against Allianz for a total of about $6 billion in damages. The losses stem from Allianz’s use of complex options strategies to generate returns for their $15 billion Structured Alpha funds. When the coronavirus pandemic caused stock markets to tumble in February and March 2020, the levered Allianz funds could not withstand the sharp volatility and plummeted in value, in some cases by 80% or more. Lawsuits and Arbitration Involving Investment Advisers The Arkansas Teacher Retirement System was the first to file a lawsuit against Allianz in July 2020. Arkansas Teachers, which had $1.6 billion in three Structured Alpha funds at the end of 2019, accused Allianz of breach of contract, breach of fiduciary duty and negligence. In its lawsuit it said it had lost $774 million. In February 2022, […]