A putative Class Action Complaint was filed in the United States District Court for the District of Massachusetts for Timothy Kelley (an ex-participant in the Avanade and Hewlett-Packard 401(k) plans) and Jamie Fine (a participant in the Delta 401(k) plan) accusing Fidelity of fiduciary breaches over its handling of floating participant contributions . Class action status is being sought on behalf of all Fidelity 401(k) participants, not just participants in the Avanade, Delta and HP plans.
The Complaint alleges that Fidelity 401(k) participants’ contributions are held in temporary cash accounts before being invested in mutual funds and the like. These contributions are then held in the cash account, earning interest. The Complaint alleges Fidelity takes all of that interest and first pays itself. Then, the Complaint argues, Fidelity will take the rest of that interest and put it in the mutual fund which is spread out over investors. The Complaint focuses on this practice that affected all 401(k) plans for which Fidelity does recordkeeping.
This is not the first time Fidelity has been sued over retirement or investments accounts. According to a NY Times Article, employees of ABB, Inc. sued ABB and Fidelity for charging excessive retirement management fees. The judge in the case ruled that ABB breached its fiduciary duty to its own employees. The court also held that Fidelity breached its fiduciary duty to ABB’s retirement plan by failing to allocate properly interest earned from the overnight investment of plan funds. The court originally ordered ABB to pay $35.2 million in damages and Fidelity to pay $1.7 million, according to the article, but later ordered ABB and Fidelity to pay $13.4 million more in attorney fees and costs. The article quoted from the Judge’s opinion that “ABB breached its fiduciary duties of both loyalty and prudence to the retirement plans, as a result of which it benefited significantly while plan beneficiaries were deprived of millions of dollars. Fidelity, while less culpable, also took plan assets in violation of its fiduciary duty.”
The Plaintiffs’ attorneys are: Richard Frankowski with The Frankowski Firm in Birmingham, Alabama; Joseph Peiffer of Fishman Haygood Phelps Walmsley Willis & Swanson in New Orleans; Todd Schneider and Mark Johnson in San Fransico, and Garrett Wotkyns and Michael McKay in Scottsdale, Arizona, all four of whom are with Schneider Wallace Cottrell Brayton Konekcy; James Kaufman of Levin, Papantonio, Thomas, Mitchell, Rafferty & Proctor in Pensavola, Florida; Elizabeth Ryan and John Roddy with Bailey in Boston; and Suyash Agrawal and Jeannie Evans with Agrawal Evans in Chicago.
If you or someone you know has lost money as a result of poor handling of a retirement account, please contact Richard Frankowski at 205-747-1903 to discuss your potential legal remedies.