Lowe’s settles 401(k) suit, another university targeted
A plan participant sued the company on behalf of the class in 2018, alleging that Lowe’s and the plan’s investment consultant, Aon Hewitt Investment Consulting, violated their fiduciary duties in connection with a fund on the plan menu.
Lowe’s has agreed to a settle a class-action lawsuit over its 401(k) plan, which allegedly made an inappropriate investment of $1 billion in the Hewitt Growth Fund.
A plan participant sued the company on behalf of the class in 2018, alleging that Lowe’s and the plan’s investment consultant, Aon Hewitt Investment Consulting, violated their fiduciary duties in connection with that fund’s inclusion on the plan menu.
Details of the settlement, the notice of which was submitted last Thursday, were not available and will be made public when a final agreement is submitted to the court for approval. The settlement does not include Aon Hewitt; those claims are slated for trial on June 28, an attorney for the plaintiffs confirmed.
In 2015, Lowe’s placed three Hewitt funds on its menu, including the Growth Fund, according to the 2018 complaint.
“It was extraordinarily irresponsible for defendants to make such a large gamble on the Hewitt Growth Fund,” as that investment option had less than two years of performance history at the time, the plaintiff noted. Further, the fund had cumulative negative returns of -0.67% between the fourth quarter of 2013 and the third quarter of 2015, by the time it was added to the plan, according to the complaint. Meanwhile, “the eight funds it replaced had a weighted average return of 7.30%.”
The Lowe’s plan represented about $6.6 billion in assets among roughly 272,000 participants as of 2019, according to data from the Department of Labor.
The judge presiding over the case denied motions for summary judgment for both the plaintiff and defendants in February.
The case is filed in U.S. District Court for the Western District of North Carolina. Law firms Tharrington Smith and Nichols Kaster represent the plaintiff and class.
UNIVERSITY OF TAMPA SUED
A plaintiff filed a class action case Wednesday against the University of Tampa, alleging that the school breached its fiduciary duty of prudence by not negotiating better record-keeping terms with TIAA.
Because the agreement with TIAA did not including a cap on revenue-sharing payments it received from mutual funds and annuity contracts on the plan menu, the record keeper’s compensation led to “fees [that] are more than 10 times what they should be,” according to the complaint. Participants paid an estimated $3 million in administrative fees over the past six years. The plan represented $160 million in assets among 1,400 participants as of 2019, according to the plaintiff.
TIAA is not named as a party in the case.
The lawsuit is similar to many others that have been brought against colleges and universities, some of which have led to seven- or eight-figure settlements, the plaintiff noted. For example, a case against the Massachusetts Institute of Technology settled for more than $18 million, while one against Emory University settled for $17 million and another against Vanderbilt University ended with a $14.5 million settlement, the complaint stated.
The University of Tampa plan changed its record-keeping arrangement with TIAA last year to one “that actually identified exactly what the plan and its participants were being charged.”
A spokesperson for the university said it had no comment on the lawsuit.
The case was filed in U.S. District Court for the Middle District of Florida Tampa Division.
Law firms Wenzel Fenton Cabassa and McKay Law represent the plaintiff and proposed class.
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