Retirement Plan Investment Decisions Attacked in Class Actions Threatening Financial Services Industry

During the past year, there have been a number of lawsuits in which groups of retirement plan participants have challenged the plan investment decisions of plan fiduciaries under the Employee Retirement Income Security Act (“ERISA”) and other federal statutes. For example, as reported in The Wall Street Journal, The New York Times and The Washington Post, three major corporations and the trustees of the retirement plans which these companies sponsor have been named as defendants in class actions filed in federal court in the Eastern District of Pennsylvania, the Eastern District of Virginia and the Central District of California. In each case, plan participants have asserted claims related to the decision to restrict or change their 401(k) investment choices and/or to invest defined benefit plan assets in “in-house” mutual funds. These cases are significant, particularly for employers and fiduciaries in the banking, financial services, mutual fund and insurance industries, many of which routinely offer in-house financial products as 401(k) investment choices or invest defined benefit plan assets in in-house financial products.

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