A handful of recent lawsuits have named, but not charged, Financial Engines in alleged “pay-to-play” arrangements with providers. That could be getting ready to change.
Keller Rohrback L.L.P. now says the Seattle-based ERISA litigation firm is investigating claims of an unlawful “pay-to-play” arrangement between several major service providers to employee retirement plans – an investigation it says focuses on Financial Engines, Inc.
According to a press release, the investigation focuses on whether these entities had a “pay-to-play” arrangement—wherein Financial Engines charged participants of retirement savings plans excessive fees for its investment advice services and agreed to pay recordkeepers Fidelity, Hewitt, Mercer and Xerox “a significant percentage of its fees in exchange for being the exclusive service provider of investment advice on their 401(k) investment platforms.”
Keller Rohrback describes the arrangement this way: “a 401(k) participant may be charged a percentage of his or her account balance for Financial Engines’ services – and a portion of that fee is then shared with the recordkeeper for the plan. For example, if a participant is charged $100 by Financial Engines, Financial Engines may turn around and give $30 of that $100 to the recordkeeper for the plan – but the recordkeeper is already being compensated by separate fees. Participants may not know that these fees are being shared or that they are being overcharged.”
As noted above, the arrangement has been noted in several recent lawsuits, including one involving Xerox HR Solutions, Voya and Hewitt Associates.
Ah, but the purpose of the press release is to alert potential plaintiff-participants to the opportunity to pursue recoveries, including from firms on this list that Keller Rohrback says “may have been subject to this ‘pay-to-play’ arrangement”:
AbbVie Inc.
Koch Industries, Inc.
Allianz
Land O’Lakes, Inc.
American Electric Power Service Corp.
Motorola, Inc.
American Financial Group, Inc.
Praxair, Inc.
Ameriprise Financial, Inc.
Shell Oil Co.
Anheuser-Busch Companies, LLC
SunTrust Banks, Inc.
Ardent Health Services Management Company, Inc.
Sutter Health
CBS Corp.
Target Corp.
Centerpoint Energy, Inc.
Tenneco Automotive Operating Company, Inc.
Citigroup, Inc.
The Clorox Co.
Deutsche Bank Americas Holding Corp.
The Hartford Financial Services Group, Inc.
Discover Financial Services, Inc.
The Hertz Co.
Edison International
The Home Depot, Inc.
Exelis, Inc.
Tesoro Corp.
Exxon Mobil Corp.
Thompson Reuters Holdings, Inc.
First Data Corp.
United Launch Alliance, LLC
Gannett Company, Inc.
United Technologies Corp.
General Electric Corp.
Wisconsin Power & Light Co.
Hartford Hospital
Xerox Business Services, LLC
Health Net, Inc.
Yum Brands, Inc.
IBM Corp.
The law firm notes that other companies whose retirement plans include Financial Engines also may have been subject to the “pay-to-play” arrangement, and that “If your employer’s retirement plan includes Financial Engines as an investment advisor,” you are encouraged to “contact us to learn more.”
Stay tuned – this looks like another litigation wave.
