The parties from three different participant suits against a major financial services institution have come to terms.
The case, pending before Judge Jesse M. Furman of the U.S. District Court for the Southern District of New York, had in 2018 issued a one-paragraph order allowing most of the lawsuit to proceed despite JPMorgan’s motion to dismiss. In 2019 Judge Furman certified the case as a class action of some 300,000 participants.
The Suits
The suit is actually three separate participant suits that have been joined, two filed in March 2017 (see JPMorgan Served with Third Participant Suit, and Provider Served With Second Participant Suit This Year), following close on the heels of the original suit, Beach v. JPMorgan Chase Bank (S.D.N.Y., No. 1:17-cv-00563), which was filed Jan. 25, 2017.
That case—as well as the other two—alleged that participants in the JPMorgan Chase 401(k) Savings Plan had been ill-served by the plan fiduciaries (the listing of the defendants alone consumed a fair amount of the original 60-page filing) failed to “use their expertise and the Plan’s bargaining power” to secure lower fees on the investment options in the plan. Neither that, nor the allegations regarding the reliance on proprietary (or related) funds, much less criticism regarding the use of mutual funds, rather than collective funds or separate accounts, were unique to this litigation, or that $20 billion JPMorgan plan should have been able to strike a better deal for its participants.
What’s Different?
However, the suits do point to inquiries by the OCC and the SEC into business practices where JP Morgan had improperly funneled client assets into JPMorgan-affiliated funds rather than third-party investment options in order to generate investment fees that they claim led the bank to eventually reduce the fees charged by its proprietary funds and by BlackRock funds to plan beneficiaries, in some cases eliminating these investment options altogether.
With the combining of suits, there is a list of plaintiffs’ counsel commensurate with the size of the plaintiff class: Kessler, Topaz, Meltzer & Check LLP; Nichols Kaster PLLP; Robbins, Geller, Rudman & Dowd LLP; Keller Rohrback LLP; and Levi & Korinsky LLP.
That said, the parties say (Beach v. JPMorgan Chase Bank, NA, S.D.N.Y., No. 1:17-cv-00563, notice of settlement 4/7/20) they “…have reached an agreement in principle to settle this action on a class-wide basis,” and that they “…anticipate that they will finalize the settlement agreement and submit a motion for preliminary approval of the settlement by May 22, 2020.”
At which point we’ll know more about the terms of the settlement.
This is, of course the latest financial services company to agree to settle such claims—joining SunTrust ($29 million) SEI ($6.8 million), MFS ($6.875 million), Eaton Vance ($3.45 million), Franklin Templeton ($4.3 million), BB&T ($24 million), Jackson National ($4.5 million), Deutsche Bank ($21.9 million), American Airlines Group Inc. ($22 million), Allianz SE ($12 million), TIAA ($5 million), and most recently Invesco.
Those decisions stand somewhat in contrast to the cases involving American Century and, more recently, CenturyLink, in which the defendants chose to go to court—and won.
