A long-standing proprietary fund has (finally) resulted in one of the largest proprietary fund settlements to date.
The case (Fuller v. SunTrust Banks, Inc., N.D. Ga., No. 1:11-cv-00784-ODE, 7/16/19) arises out of a suit brought by five former SunTrust participants who alleged violations[i] of ERISA’s fiduciary duty provisions as to the SunTrust Banks, Inc. 401(k) Plan, generally that (as many of the proprietary fund/excessive fee suits have alleged) that the defendant fiduciaries “improperly furthered SunTrust Banks, Inc.’s corporate interests—in lieu of interests of the Plan’s participants—by favoring investment options that were affiliated with and enriched SunTrust Banks, Inc.”
The settlement comes seven years after the suit was dismissed as being beyond ERISA’s six-year statute of limitations—but got second shot following the Supreme Court’s ruling in Tibble v. Edison Int’l. In that case, the plaintiffs, represented by the law firm of Schlichter, Bogard & Denton, had successfully persuaded the U.S. Supreme Court that ERISA’s six-year statute of limitations extended beyond the initial decision to place certain retail class mutual funds on the plan menu.
This settlement (Fuller v. SunTrust Banks, Inc., N.D. Ga., No. 1:11-cv-00784, motion for settlement approval 3/11/20) is for the sum of $29 million, with 90% of that to go to those participants invested in what were termed the “surviving funds” (funds still available in the plan), and the rest to the “dismissed funds,” allocated to each member of the class on a pro-rata basis.
The plaintiff’s lawyers intend to seek an award “in an amount not to exceed $9,666,657, plus all reasonable litigation costs and expenses advanced and carried by Class Counsel and Liaison Counsel for the duration of this Action.”
They also plan to seek Incentive Awards, in an amount not to exceed $15,000 per Class Representative.
This is, of course the latest financial services company to agree to settle such claims—and the largest in recent memory—joining 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.
