Despite allegations of charging fees 10 times what they should be, an excessive fee suit against fiduciaries of a university 403(b) plan has been dropped.
The suit was brought against the $4.2 billion University of Rochester Retirement Program less than a year ago by Christopher D’Amore on behalf of the more than 36,000 employees of the University of Rochester. As has been common in these cases, the defendant university fiduciaries are alleged to have failed to take advantage of their size and clout as a “jumbo” plan to negotiate for “low-cost high-quality administrative services,” and that defendants failed to “properly inform participants of the fees they were paying to TIAA as required by law, and most importantly, to act prudently with such information.”
One thing that stood out at the time: In the suit, D’Amore says he was “hit especially hard” by the imprudent practices alleged, in that “it appears he has been paying more than $500 per year to TIAA in service fees when a reasonable fee for administrative services is no more than $50 per year.”
However, last week D’Amore voluntarily dismissed “with prejudice” the suit, with each party to “bear its own fees and costs.” The university never filed a response to the initial suit, which alleged that a “reasonable” recordkeeping fee for the $4.2 billion, 36,000 participant Rochester plan would have been a fixed amount between $1.5 million and $1.9 million annually, while recordkeeper TIAA allegedly charged $10 million per year.
Nearly two dozen institutions of higher learning have been hit with class suits alleging breach of fiduciary duty/excessive fees since August 2016. St. Louis-based Washington University, New York University, the University of Pennsylvania and Northwestern University have prevailed in making their cases in court. This case is the first to be voluntarily dismissed by the plaintiff. The University of Chicago and Duke University have settled, while New York University took their case to court and won.
The case is D’Amore v. Univ. of Rochester, W.D.N.Y., No. 6:18-cv-06357-MAT, voluntary dismissal order 1/24/19.