A second smaller 401(k) plan in as many months is the target of a lawsuit accusing it of a fiduciary breach.
“A participant in Checksmart Financial LLC’s 401(k) plan sued the loan servicing company for allegedly “breaching its ERISA fiduciary duties by allowing excessive administrative fees and imprudent investment options in the company’s plan ( Bernaola v. Checksmart Financial LLC , S.D. Ohio, No. 2:16-cv-00684, 7/14/16 ),” according to Bloomberg BNA.
The news service notes that the lawsuit, filed July 14 in the U.S. District Court for the Southern District of Ohio, targets a plan with $25 million in assets and more than 1,700 participants.
“In May, a similar lawsuit involving a plan with $9 million in assets was filed, prompting some in the industry to question whether widespread litigation against plans of that size would ensue,” Bloomberg reports. “However, in June that lawsuit was dismissed, at the participant’s request.”
According to the details of the suit, Enrique Bernaola sued his employer Checksmart, the plan fiduciaries and the plan’s financial advisors. He claims that as fiduciaries, they failed in their duty to ensure that the “fees and expenses of the plan were fair and reasonable.”
The expenses have been “grossly excessive” and focused on “expensive and unsuitable actively-managed mutual funds without an adequate or appropriate number of passively managed and less expensive mutual fund investment options,” the complaint said.