On December 28, 2018, a proposed class of approximately 17,000 participants in the 401(k) Plan for Transamerica Corp. (“Transamerica”) sued the financial services company in the United States District Court for the Northern District of Iowa. The participants are accusing Transamerica of violating the Employee Retirement Income Security Act (“ERISA”) by including six obviously underperforming proprietary funds in the plan at an alleged loss of hundreds of millions of dollars.
The complaint asserts that Transamerica continually “selected and retained poor-performing proprietary investment portfolios for the Plan when superior investment options were readily available.” The funds in question underperformed their benchmarks as significantly as 30 percent during a ten-year period.
The proposed class is bringing two claims against Transamerica, one for its breach of ERISA fiduciary duty of prudence in failing to remove the six underperforming funds, and one for lack of adequacy of monitoring the 401(k) plan’s investment committee and the 20 individuals tasked with overseeing the fund.
Transamerica has denied the allegations, stating that “[o]ur business complies with all applicable state and federal statutes and regulations, and participates in periodic regulatory reviews. The allegations of wrongdoing against Transamerica in the recently filed lawsuit – which focuses on six ‘proprietary investment portfolios’ in the Plan – are false and we will vigorously oppose the case.”
The legal team at Shepherd, Finkelman, Miller & Shah, LLP (“SFMS”) has significant experience litigating class action and ERISA matters. If you have any questions regarding this subject or this posting, please contact Nick Lussier or Chiharu Sekino. We can also be reached toll-free at (866) 540-5505.
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