BB&T settles 401(k) lawsuit for $24 million

Branch Banking and Trust Co. will pay $24 million to settle a lawsuit alleging it profited from its 401(k) plan at the expense of its employees, one of the largest settlements to date reached by a financial firm involved in such litigation. The lawsuit, Sims et al v. BB&T Corp. et al, alleged the firm breached its fiduciary duties by causing its 401(k) plan to pay unreasonable investment management and administrative fees, among other charges, constituting self-dealing and imprudent decision-making. BB&T was the plan record keeper, custodian and investment manager in addition to being the plan sponsor. The settlement, filed Nov. 30, must be approved a by a judge. It covers participants in the company retirement plan from Sept. 4, 2009 to Oct. 25, 2018. "We are pleased to have resolved the claims involving supervision of our 401(k) plan, and believe a voluntary settlement is the best way for all parties to move forward, avoid a costly trial and further extend an already lengthy litigation process," said BB&T spokesman David White. The BB&T case was filed in September 2015 in the U.S. District Court for the Middle District of North Carolina. Lawsuits targeting plan sponsors over 401(k) plan management began to appear en masse around 12 years ago, and have picked up steam over the past several years. Financial firms, especially investment managers with an active-management bent, have emerged as a subset of defendants. Several have settled within the past few months: Waddell & Reed Financial Inc. and Jackson National Life Insurance Co. in November for $4.9 million and $4.5 million, respectively, and Citigroup Inc. in August for $6.9 million. Deutsche Bank also settled in August for $21.9 million, one of the largest recent settlements in these cases. Other firms to have reached heftier settlements in recent years include American Airlines Inc. (which formerly owned an affiliated investment manager), Ameriprise Financial Inc. and Massachusetts Mutual Life Insurance Co., which respectively paid $22 million, $27.5 million and $31 million. Courts have found in favor of some defendants, including Capital Group, Putnam Investments and Wells Fargo & Co.