Transamerica sued over 401(k) plan investment options

Posted January 2nd, 2019.

As It Appeared On


Current and former participants in the Transamerica Corp.’s 401(k) plan have sued the company and plan fiduciaries, alleging they breached their duties under ERISA by failing to remove underperforming proprietary investments.

The defendants “saddled the plan’s participants with substandard investment portfolios that were managed by a Transamerica affiliate,” said the complaint, filed Dec. 28 in the case of Karg et al. vs. Transamerica Corp et al.

“Year after year, Transamerica selected and retained poor-performing proprietary investment portfolios for the plan when superior investment options were readily available,” said the complaint, which was filed in U.S. District Court in Cedar Rapids, Iowa.

The participants argued the Transamerica affiliate and investment adviser, Transamerica Asset Management, “was or should have been aware of the portfolios’ poor annual investment performance on a real-time basis,” said the complaint, citing six Transamerica products.

“Any reasonable, disinterested investor monitoring their investments would have viewed these portfolios as imprudent investments and removed them from the plan,” said the complaint, which seeks class-action status. “Instead, Transamerica continued to offer proprietary portfolios when their rates of return were lower than meaningful benchmarks. Transamerica therefore neglected its duty to monitor the plan’s investments and remove imprudent ones.”

The Transamerica 401(k) Retirement Savings Plan, Cedar Rapids, had assets of $1.91 billion as of Dec. 31, 2017, according to the latest Form 5500 filing.

A Transamerica representative did not immediately respond to a request for comment.

Sanford Heisler Sharp, LLP is a nationwide litigation law firm with offices in New York, Washington, DC, San Francisco, San Diego, Nashville, and Baltimore. We represent individuals against powerful interests. We act as a private attorney general in support of the private and public good.

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