A class-action suit against a major 401(k) provider charges that mutual fund companies act illegally when they rebate a share of administrative fees to the plan vendor.
The lawsuit, filed in a federal court in Connecticut, charges
Plaintiffs further argue that Nationwide became a fiduciary under ERISA when it accepted administrative fees deducted from plan assets, and that the practice "breaches fiduciary responsibility because it benefits [Nationwide] and not the plan participants," says plaintiffs attorney Roger Mandel.
Nationwide has filed to dismiss the case, but should it go forward, it will be the first time a court rules on the legality of revenue sharing.
"We have every reason to believe we have conducted our business in an appropriate manner," a company statement says. "We believe the plaintiffs lawyers are trying to stretch the ERISA law beyond its recognized boundaries."
