Employees of Lowe’s hardware store who participate in the 401(k) plan claim that the company chose a weak fund that lost plan members money. Benjamin Ritz, plaintiff, alleges that he had all his retirement funds invested with Lowe’s. He further claims that he was financially injured due to Lowe’s choice to move over $1 billion from eight other investment funds into one other fund: Hewitt Growth Fund. Lowe’s made this move on the advice of Aon Hewitt Investment Consulting Fund. Ritz also claims that if Lowe’s had not moved the funds, plan participants would have made $100 million more.
Ritz further claims that this situation represents a violation of the Employee Retirement Income Security Act (ERISA). Ritz seeks damages for himself and other plan participants who were similarly affected by Lowe’s funds transfer. Ritz would like to force the companies to pay for the participants’ losses, force Hewitt to disgorge profits related to the transfer of funds and stop Lowe’s from further investments in the Hewitt Growth Fund in the future.
According the ERISA class action lawsuit, Lowe’s moved the plan funds on the advice of Aon Hewitt Investment Consulting, the owner of the Hewitt Growth Fund. Plaintiffs claim that this behavior was self-serving. They were encouraging the transfer to support the fund, which was exhibiting poor performance. The plaintiff claims that Hewitt put its own interests ahead of the interests of plan participants, which is in violation of ERISA. The plaintiff also alleges that Lowe’s should have been more vigilant – considering quality and reliability of the information received from the advisor, particularly considering Hewitt’s conflict of interest.
The company’s plan reportedly has approximately $5.2 billion in assets, 250,000 participants and has been taking investment advice on their 401(k) plans since 2009.
If you have questions about mismanagement of your plan’s funds or if you suspect your employer of ERISA violations, please get in touch with one of the experienced California employment law attorneys at Blumenthal Nordrehaug Bhowmik De Blouw LLP.