Critics have long accused Live Nation of using its market dominance to charge high fees and of threatening to ice out venues from Live Nation events if they don’t use Ticketmaster—the ticketing giant it merged with in 2010.
Now a pair of former employees are complaining about Live Nation Entertainment Inc.’s $769 million 401(k) plan, alleging in a new class action complaint that the retirement plan is plagued by high-cost investments and an overly risky and underperforming stable value fund.
The lawsuit filed March 15 by Santa Barbara, Calif.-based Christina Humphrey Law, P.C., in the U.S. District Court for the Central District of California from plaintiffs Pamela Avecilla and Sean Bailey alleges that Live Nation Entertainment’s 401(k) committee breached its fiduciary duties in the management, operation and administration of the plan. The suit, (Avecilla v. Live Nation Entertainment Inc., C.D. Cal., No. 2:23-cv-01943, complaint 3/15/23) accuses the concert promoter of filling its retirement plan with high-cost share class mutual funds instead of identical funds available at lower cost—breaches they say cost plan participants nearly $4.5 million in lost returns.
More specifically, the suit claims defendants breached their fiduciary duties of prudence and loyalty to the Plan by:
• Offering and maintaining funds with higher-cost share classes when identical lower cost class shares were available and could have been offered to participants resulting in participants/beneficiaries paying unnecessary costs for services that provided no value to them and resulted in a reduction of compounded return gains
• Offering a guaranteed income product that carried unnecessarily high risk, generated relatively low returns and offering an expensive share class of that product
• Offering expensive investments, depriving participants of compounded returns which greatly exceed the annual cost of fees and revenue sharing
• Failing to maintain and restore trust assets
The plaintiffs are seeking the defendants make good to the Plan all losses resulting from their breaches of fiduciary duties, and to restore to the Plan any lost profits. In addition, plaintiffs seek to reform the Plan to comply with ERISA and to prevent further breaches of fiduciary duties and grant other equitable and remedial relief as the Court may deem appropriate.
The class action complaint states that the Live Nation Entertainment 401(k) plan had 8,974 total participants with account balances and $769,009,907 in assets as of Dec. 31, 2021. Because of this, the suit claims the Plan “has tremendous bargaining power to demand low-cost administrative and investment management services and well-performing, low-cost investment funds.”
SEE ALSO:
• A ‘Win’ for Plan Sponsors, Fiduciaries as Excessive Fee Case Dismissal is Upheld
• The Dramatic Rise in Excessive 401k Fee Litigation—And Who’s Fighting It
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
