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Funding agency to pay $124M to settle 401(ok) plan mismanagement allegations


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Funding administration agency Ruane, Cunniff & Goldfarb Inc. can pay greater than $124.6 million to settle lawsuits filed by the U.S. Division of Labor and personal plaintiffs that alleged the agency improperly managed a 401(ok) plan sponsored by DST Techniques, DOL introduced Monday.

The settlement is pending courtroom approval of a associated class motion settlement, DOL mentioned. The company sued Ruane, Cunniff & Goldfarb in 2019 alleging that the agency used a “self-proclaimed funding technique of ‘non-diversification’” that resulted in losses for the plan’s greater than 9,000 contributors.

In a single instance cited by DOL’s press launch, one pharmaceutical firm’s inventory grew to embody greater than 45% of the plan’s property. When the inventory’s value fell, plan contributors “skilled vital losses to their retirement financial savings due to the plan’s concentrated portfolio,” DOL mentioned.

An investigation by the Worker Advantages Safety Administration decided that the plan managers violated the Worker Retirement Revenue Safety Act, which requires retirement plan fiduciaries to diversify a plan’s investments to be able to decrease the danger of losses. Individually, DOL mentioned EBSA decided that DST Techniques and particular person defendants did not correctly monitor the managers’ actions.

Following DOL’s 2019 go well with, DST Techniques sued Ruane, Cunniff & Goldfarb one yr later over allegations together with fraud and breach of contract. The events ultimately requested a keep of proceedings. In the meantime, Ruane, Cunniff & Goldfarb moved to dismiss DOL’s go well with, however a district courtroom choose denied the movement in March.

Ruane, Cunniff & Goldfarb didn’t reply to an HR Dive request for remark. SS&C Applied sciences Holdings, Inc., which acquired DST Techniques in 2018, additionally didn’t reply to a request for remark.

“This decision protects the rights and advantages of the plan’s contributors and exhibits that we are going to aggressively pursue applicable authorized motion to make sure these rights and advantages,” U.S. Solicitor of Labor Seema Nanda mentioned within the launch. “Fiduciaries to retirement plans should adjust to [ERISA]’s safeguards — together with diversification — to guard staff’ retirement advantages and fulfill their very own fiduciary tasks.”

DOL has notched high-profile authorized wins inside the previous yr in disputes involving retirement plans. Final September, Wells Fargo agreed to pay almost $145 million to settle the company’s investigation into whether or not a 401(ok) plan for the financial institution’s staff overpaid for Wells Fargo most popular inventory.

That very same month, DOL sued the proprietor of a New Jersey design agency, alleging that the proprietor and her partner unlawfully invested property from an worker profit-sharing plan right into a financial institution owned by the partner. The defendants in that case entered right into a consent order with DOL on Sept. 23 and agreed to pay greater than $1.8 million to plan contributors.

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