Bessemer Trust Co., a multifamily office, was hit with a lawsuit that claims its 401(k) plan relied too heavily on the company's own Old Westbury line of mutual funds, benefiting Bessemer at the expense of plan participants.
The proposed class action suit, Pecou v. Bessemer Trust Co., was filed last Wednesday in U.S. District Court for the District of New Jersey by the law firms Lynch Carpenter and Nichols Kaster.
According to the lawsuit, the Old Westbury funds, which are offered by a subsidiary, Bessemer Investment Management, are rarely used by 401(k) plans the size of Bessemer’s. “Among all plans with at least $100 million in assets, no plan other than the [Bessemer] Plan is invested in a single Old Westbury fund,” the suit says.
The lawsuit argues that the use of the Westbury funds “cost Plan participants millions of dollars in excess fees.”
According to the lawsuit, during the period in question, Bessemer’s 401(k) held from $240 million to $500 million in assets and had from 1,000 to 1,300 active participants.
It estimates that plans that have $100 million to $500 million in assets generally have average asset-weighted costs of 42 basis points to 47 bps, while the Bessemer plan had costs ranging from 73 bps to 99 bps in the years covered by the lawsuit.
It also argues that some of the Westbury funds underperformed their benchmarks.
Bessemer Trust did not respond to a request for comment.
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