Transamerica, Ameriprise Financial, MassMutual and now American Century.
Financial services and mutual fund companies are increasingly the targets of lawsuits over alleged fiduciary breaches in their own 401(k) retirement plans.
The latest, Kansas City-based American Century Investments, is being sues by two former employees who claim the mutual fund company charged “excessive fees” while offering “chronically under-performing” American Century funds as choices.
The lawsuit, filed in U.S. District Court in Kansas City, said a “disloyal and imprudent process” led the 401(k) plan to offer only American Century funds and shares of American Century itself as investment choices, according to The Kanas City Star.
As a result, employees’ accounts were “laden with high cost, proprietary mutual funds” that would not have survived a selection process that was “not tainted by self-interest,” according to the paper. It said putting American Century-managed funds in the 401(k) plan generated revenues for American Century though lower cost alternatives were available.
American Century, in an emailed statement to the Star, “rejected the claims and said it was proud of contributing to employees’ retirements.”
“The lawsuit is entirely without merit and we will mount a vigorous defense,” American Century said. “We offer our employees competitive compensation and a generous benefits package, which includes our retirement plan. The plan provides employees with a wide range of investment options and is managed in the best interests of participants.”
The lawsuit seeks class-action status for other participants in the plan.