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GCC NEWS FEATURE                                                                                         www.lawcrossing.com     1. 800.973.1177

401(k) Fee Suits on the Rise
[By Anique Gonzalez]
Following the surging trend of employees filing lawsuits against their employers, employers have yet another reason to be wary: 401(k) plans. Recently, fees
associated with 401(k) plans have come under close scrutiny and are resulting in mounting lawsuits against small and large corporations alike.

The timing of the suits, whether planned or         question were “excessive,” “unreasonable,”          information associated with 40(k) fees
not, coincides with investigations by three         or related to “revenue sharing.”                    charged to employees. Moreover, the legal
federal entities: the U.S. Department of                                                                pressure on such companies continues to
Labor, the U.S. Securities and Exchange             However, Schlichter Bogard is not the               mount. Three months ago, for instance,
Commission, and a congressional                     only firm filing suits. Keller Rohrback and         financial experts appeared before a
committee. These inspections are looking            McTigue & Porter have also filed similar            congressional hearing related to excessive
into the fees employees must pay for                claims against major corporations such              40(k) fees.
40(k) plans, mutual funds, annuities, and          as ING Life Insurance Annuity Company,
other retirement programs, as well as the           General Motors Corporation, and Radio               Thus far, the likely outcome of these cases
accessibility of the information associated         Shack Corporation. These claims not only            is unclear. What is clear, though, is this: if
with those fees. Interestingly, some suits          address the availability of fee information but     40(k) suits are increasingly found in favor
are even going after employees who are              also whether offering plans with excessive          of employees, the number of lawsuits filed
aware of excessive fees but choose to               fees is in the best interest of the employee.       will drastically rise and the landscape of
participate in such plans anyway.                                                                       40(k) and associated retirement plans will
                                                    The majority of the suits filed by Schlichter       dramatically be altered by companies and
Starting in the fall of 2006, Schlichter,           Bogard have been able to withstand motion-          the government alike.
Bogard & Denton began filing class action           to-dismiss claims filed by the defendants,
lawsuits claiming the companies they filed          although not all claims have been found             On the net
against, including The Boeing Company,              in the firm’s favor. A case against Exelon
Kraft Foods, Inc., and Bechtel Group,               Corporation, for example, was dismissed after       Schlichter, Bogard & Denton
Inc., did not act in good faith. Namely,            a judge found that there were no unwarranted        www.uselaws.com
they allegedly permitted intermediaries             fees associated with the company’s 40(k)
to charge employees unnamed and often               plan. Additionally, in another claim, a federal     U.S. Department of Labor
excessive fees in relation to their 40(k)          judge rejected defendants in a case against         www.dol.gov
plans. Thus far, Schlichter Bogard has filed        Northrop Grumman.
3 suits in all.                                                                                        U.S. Government Accountability Office
                                                    It is likely the number of suits will continue      www.gao.gov
The claims have been filed under ERISA,             to grow in the coming years. The U.S.
the Employee Retirement Income Security             Government Accountability Office released
Act of 974, which the firm believes will           a report stating that increasingly mutual
substantiate the allegations that the fees in       fund companies do not properly divulge


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