Fidelity Investments and plaintiff's attorney Jerome Schlichter are engaged in a war of words over the potential for Fidelity chairman and CEO Abigail Johnson to appear and testify at an upcoming trial around 401(k) mismanagement.
The lawsuit in question, Tracey et al v. Massachusetts Institute of Technology, hinges on whether the university breached its fiduciary duty by retaining Fidelity as its 401(k) plan record keeper and using high-cost, underperforming investments.
Neither Fidelity nor Ms. Johnson are defendants in the lawsuit. But plaintiffs claim Ms. Johnson has direct knowledge of a quid-pro-quo arrangement between MIT and Fidelity that would help prove MIT's malfeasance.
Mr. Schlichter, who represents the plaintiffs, included Ms. Johnson on a preliminary list of witnesses at the trial, which is scheduled to begin in September — an outcome Fidelity is sorely trying to avoid.
The company, which is the largest record keeper of defined-contribution plans, with more than $2 trillion in assets, labeled plaintiffs' efforts to obtain Ms. Johnson's testimony a "transparent attempt to harass Ms. Johnson and to attract media attention," according to a court filing requesting a protective order against a subpoena.
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Ms. Johnson has "no "relevant testimony" and "lacks any knowledge" of the relevant facts, according to the filing made Aug. 19 in Massachusetts federal court.
Plaintiffs argue that Ms. Johnson's claims of harassment and media attention are "illogical," since the preliminary list of witnesses was only shared with defendants, according to a filing Aug. 26 asking the Massachusetts court to deny Fidelity's "premature" motion.
In addition, Ms. Johnson "offers no evidence to meet her burden of demonstrating that she lacks unique knowledge," the plaintiffs' filing said.
Plaintiffs broached the quid-pro-quo allegations in an Aug. 5 court filing, claiming that MIT retained Fidelity's record-keeping services and in-house investment funds for its 401(k) plan with the expectation that Fidelity and Ms. Johnson would make a large donation to the university.
Mr. Schlichter said he had unearthed new evidence, such as emails from MIT management, proving the existence of this mutually beneficial arrangement, and attempted to bring a new fiduciary-breach claim against MIT.
Plaintiffs made "reckless statements" about Ms. Johnson and Fidelity in a press release announcing this new evidence, according to defense attorneys.
Judge Nathaniel M. Gorton denied Mr. Schlichter's motion to bring the new claim, arguing in an Aug. 8 order that asserting a new legal theory right before trial was "fundamentally unfair."
Mr. Schlichter said the press release was "in no way 'reckless' or 'false.'"
The lawsuit is one of several Mr. Schlichter has filed against more than a dozen prominent universities since 2016 alleging retirement-plan mismanagement.