Boeing comes in for a hard landing. The plane-building mega-giant has agreed to pay $57 million to end a lawsuit accusing it of a breach of fiduciary duty in its 401(k) plan by offering “imprudent investment options and passing on excessive fees to employees.”
Dow Jones, which first reported the amount, says the settlement still needs approval by a federal judge.
Boeing is the latest company to settle a 401(k)-related class-action lawsuit, which was brought was by 190,000 current and former employees.
The aircraft manufacturer was targeted by Jerome Schlichter of St. Louis-based law firm Schlichter Bogard & Denton, LLP. Schlichter who recently made headlines as lead attorney for plaintiffs in Tibble v. Edison. He also represented the Lockheed plaintiffs and negotiated a $27.5 million deal with Ameriprise Financial Inc. earlier this year. The Wall Street Journal reports that, all told, settlements in eight of his 401(k) fiduciary-related lawsuits have brought in $214 million, with about a third of that going to Schlichter’s firm.
New of the settlement was came in August, the same day a trial was scheduled to begin in the nine-year-old case.
The Journal notes that as with Tibble, the class-action suit centered on Boeing’s alleged failure to exercise its fiduciary duties to employees by allowing excessive 401(k) fees, choosing higher-cost retail mutual funds over cheaper institutional shares, and improperly engaging revenue sharing with third-party investment vendors.
Boeing has consistently denied the claims.
Schlichter said he was prepared to go to trial and was pleased to reach a tentative settlement. He said his firm continues to be committed “to improving the 401k savings plans that millions of Americans rely on for a secure retirement.”
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
When is disbursement of funds scheduled to employees and former employees?