Schwab sued over funds offered in its own 401(k) plan
Plaintiff argues company “imprudently and disloyally larded the plan with unnecessary, expensive and poorly performing investment products and services.”
A participant in a Charles Schwab Corp. 401(k) plan sued plan and corporate executives, alleging they violated their ERISA duties by offering Schwab funds that were “more expensive than comparable alternatives available in the marketplace.”
The lawsuit, filed Jan. 19 in U.S. District Court in San Francisco, contended that the executives breached their fiduciary duties, saying they “imprudently and disloyally larded the plan with unnecessary, expensive and poorly performing investment products and services.”
The lawsuit, Severson vs. The Charles Schwab Corp. et al., seeks class-action status.
“We intend to vigorously defend against this case and believe it is totally without merit,” Mike Peterson, a Schwab spokesman, wrote in an email. “We are committed to helping employees save for retirement by providing a 401(k) plan with low-cost investment products and independent personalized advice.”
Plaintiff Christopher Severson, a participant in the SchwabPlan Retirement Savings and Investment Plan, asserted in his complaint that offering Schwab products and services enabled Schwab to reap “significant fees and profits at the expense of the plan and its participants.”
The plan had $2.93 billion in assets as Dec. 31, 2015, according to the company’s latest Form 5500 filing.
Robert Steyer is a reporter for InvestmentNews’ sister publication Pensions&Investments.
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