We’re now one month into 2016, and on pace to see more excessive fee lawsuits this year than in any previous year. Schlichter, Bogard & Denton out of St. Louis has filed yet another law suit against a retirement plan sponsor for imprudently selecting and retaining poorly performing mutual funds, allowing participants to be charged excessive record keeping fees, and prohibited transactions between the plan and a party in interest.
In this case
the complaint alleges that Oracle Corp., which is the plan sponsor of an $11 billion 401(k) plan, allowed participants to be charged between $68 and $140 per participant when, due to the size of the plan, a reasonable record keeping fee would have been $25 per participant. The complaint also alleges prohibited transactions that stem from the plan’s record keeper, Fidelity, owning $2 billion in Oracle stock. Fidelity is Oracle’s 6th largest institutional shareholder, and the fact that Fidelity is also Oracle’s 401(k) plan record keeper creates the perception of a potential conflict of interest.
“It is important that plan sponsors continually monitor all of their service providers.”
As the number of excessive fee lawsuits continues to increase, and the record keeping industry continues to consolidate, it is important that plan sponsors continually monitor all of their service providers. For more information on record keeper industry consolidation and what it means for plan sponsors, see our recent article
If you are concerned about the increasing threat of litigation related to your retirement plan, contact our ERISA Services Team
to discuss implementing a prudent process for running your retirement plan.
 Troudt v. Oracle Corporation. No. 1:16-cv-00175. USDC Colorado. 22 January 2016.
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