Who’s counting at this point? Tort-terror Jerry Schlichter mentioned in January that they’re were roughly 40 fiduciary lawsuits in play at that time. We have a feeling that number has increased significantly in the months since, and the latest case can be added to the tally.
New York Life has been sued by employees who claim that one of the company’s in-house mutual funds “carried needlessly high fees that eroded their retirement savings.”
Bloomberg BNA reported Friday that in the proposed class action filed on July 18, two New York Life employees accuse the company of “lining its own pockets at their expense by offering its MainStay S&P 500 Index Fund in the company’s 401(k) plans. The employees say this violated federal benefits law, because the MainStay fund carried fees more than 17 times higher than a readily available alternative from Vanguard.”
“In particular, the employees allege that none of the 750 largest retirement plans in the country offered the MainStay fund, while more than 250 such plans offered the lower-fee Vanguard Institutional Index Fund,” according to the news service. “New York Life decided to offer its MainStay fund to further the company’s own financial interests and not to benefit the company’s employees, they allege.”
According to the employees, the 401(k) plan’s participants would have saved nearly $3 million in fees over a five-year period had New York Life offered the Vanguard fund instead of the MainStay, Bloomberg concludes.
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.