Excessive Investment Fees Result in Agreed Upon $14M Settlement from Fujitsu

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In order to end a proposed class action close to $150 million, Fujitsu agreed to pay a $14 million settlement. The proposed class action alleged that the company paid more in investment fees for retirement funds than necessary affecting close to 23,000 current and former employees.

Workers hope the judge approves the deal that would be worth about $600 for each class member. They argue that it is a favorable comparison to other settlements in ERISA (Employee Retirement Income Security Act) suits regarding excessive fees. The settlement amount proposed is about 1% of the plan’s total value according to the class.

The workers’ unopposed motion for preliminary settlement approval urged the judge to approve the settlement stating that the amount was impressive in aggregate, when considered on a per-capita basis, and when viewed as a percentage of the plan’s assets. It compares favorably to other recent 401(k) settlements by all measures.

Workers originally sued Fujitsu in June 2016 alleging that the company mismanaged the employee retirement plan. Claims insisted that Fujitsu bought more expensive classes of funds than was necessary, deprived workers of returns, failed to monitor record keeping/administrative fees paid, and kept investments in plan offerings that were far too expensive.

Fujitsu first attempted to argue for dismissal claiming that the workers’ claims were based on “hindsight” and that the fees were appropriate and in line with those approved by the court in other suits. Their motion to dismiss was denied in April, but the judge did “leave open the possibility” that the arguments could win at summary judgment or trial. He also noted that some of the workers’ claims could be time-barred.

In September, the parties involved agreed on a draft deal after mediation efforts to reach a resolution. The draft deal was recently finalized and the workers now seek approval.

Approval of the settlement would mean that participants in the class (employees participating in the Fujitsu 401(k) plan between June 2010 and September 2017 would receive payment. The class includes 22,705 members. Close to a quarter of the settlement amount will likely go towards attorney fees and costs.

If you have questions about ERISA or your rights in regard to your employer provided 401(k) accounts, please get in touch with an experienced California employment law attorney at Blumenthal Nordrehaug Bhowmik De Blouw LLP.

3 ERISA Suits Against First Bankers Results in $16M Settlement Deal

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In November 2017 First Bankers Trust Services Inc. agreed to a $16 million settlement in order to resolve 3 DOL ERISA suits alleging they breached fiduciary duties by allowing 3 employee stock ownership plans to overpay for their own companies’ stock. First Bankers also committed to reforming its practices and policies regarding the handling of employee stock plan transactions. 

The settlement will put an end to 3 DOL suits brought in 2012 after investigations into plans sponsored by SJP Group Inc., Maran Inc., and Rembar Co. Inc. Each of the plans gets payouts from First Bankers (SJP’s plan will receive $8 million, Maran’s plan will receive $6.6 million and Rembar’s plan will receive $1.1 million). The settlements offer reimbursement to plans and participants as well as committing First Bankers Trust Services to clear procedures and transparency in order to ensure appropriate compliance in future dealings. 

According to DOL, First Bankers was both trustee and fiduciary for all three of the plans cited and as such, they had an obligation under ERISA to make sure that the plans did not pay more than fair market value for company stock. Also according to DOL, First Bankers signed off on purchases without doing the due diligence required of their position. Their failure to do so allegedly resulted in the plans overpaying millions for the stock. 

SJP, a New Jersey based paving company: The case regarding SJP went to bench trial in New Jersey federal court in 2016. U.S. District Judge Michael A. Shipp issued a ruling in March finding that First Bankers breached is duties and engaged in ERISA-prohibited transactions resulting in SJP’s plan to overpay close to $9.6 million for SJP’s own stock. 

Maran, a New York based clothier: At a bench trial in April, U.S. District Judge George B. Daniels of New York’s Southern District agreed to hold off judgment due to settlement discussions between the parties. 

Rembar, a New York based maker of precision parts from refractory metals: The Rembar case was still awaiting trial at the time of the settlement discussions. 

These cases make it clear just how vital it is that those retained to advise a plan about stock purchases fulfill their fiduciary duties; making sure that the price a plan pays for the plan sponsor’s stock reflects true market value. 

If you have questions about ERISA or ERISA violations, please get in touch with one of the experienced California employment law attorneys at Blumenthal, Nordrehaug & Bhowmik.