Investors are increasingly bringing dramatically worded lawsuits against 401(k) sponsors and fiduciaries for what they allege are shady fee practices, Mondaq reports. The inspiration for the lawsuits has come primarily by investigations by the Securities and Exchange Commission, Department of Labor and Congress into hidden or excessive fees.
Specifically, Congress and the SEC have pointed out that 401(k) consultants may be in revenue-sharing arrangements with the investment advisory firms whose products they recommend without disclosing those arrangements. In addition, some of the lawsuits charge that plan fiduciaries don’t offer investors less-expensive share classes as assets in a plan grow.
To date, the majority of the lawsuits have been filed in Illinois, although there are a few in Missouri, Connecticut and California—most of them aimed at Fortune 50 firms.
Although most of the lawsuits have been filed by one law firm, others are joining the fray and more lawsuits are expected.