A national law firm on Wednesday filed a class-action lawsuit against Vanderbilt University, saying the university mismanaged employee retirement plans and allowed plan managers to charge exorbitant fees.
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Employees of Yale, the Massachusetts Institute of Technology and New York University are suing the colleges over their handling of employee retirement plans.
The three lawsuits, one against each college, say the schools did not live up to their obligations under the Employee Retirement Income Security Act.
Further, because the plans offered a wide array of investment options, there were “duplicative” strategies that diluted fiduciaries’ bargaining power to obtain lower fees and caused “decision paralysis” among participants, according to the Yale suit, filed in a CT district court. “They shouldn’t be penalized”.
MIT spokeswoman Kimberly Allen said that, as a general practice, the university doesn’t comment on pending litigation.
Retirement-savings plan members could have collectively saved tens of millions of dollars if the universities used their bargaining power to cut costs, the complaints allege.
Schlichter, Bogard & Denton, LLP, of St. Louis is a national law firm that represents individuals, including victims of financial abuse and 401 (k) plan investors, whose plans suffer from excessive fees or imprudent investment options. “We will litigate this case vigorously and expect to prevail”.
NYU only first saw the lawsuit Wednesday morning and could not comment at length, the spokesman said, but noted that NYU’s plans have “comparatively low fees”, that decisions regarding plan choices are influenced by feedback from employees, and that some of the named plaintiffs recently lost an unrelated case they brought against the university. A Yale representative did not respond to a request for comment. That includes what workers paid for in record keeping expenses, as well as the fees charged by the mutual funds offered in the plans.
Fidelity is not a named defendant in the lawsuit.
Tracey, et al., v. Massachusetts Institute of Technology, et al.
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The Schlichter complaints also accuse Vanderbilt executives of fiduciary breaches because they selecting and kept “numerous high-cost and poor performing investment options compared to available lower-cost alternatives, which considerably reduced the retirement assets of the employees and retirees”.
