Another excessive fee lawsuit has been filed by the law firm of Schlichter, Bogard & Denton — this one by participants against a provider of 401(k) services sold to small and midsized employers.
The lawsuit, Pledger et al. vs. Reliance Trust Co. et al., was filed in U.S. District Court in Atlanta. The suit seeks class-action status for more than 50,000 participants in the Insperity 401(k) Plan. Insperity is a for-profit company that serves as a professional employer organization (PEO) which provides human resources and business solutions to small and medium-sized businesses throughout the United States. The employees of those businesses are enrolled in the Insperity 401(k) Plan, which is the subject of the lawsuit. The plaintiffs are four participants in this plan for Insperity clients (those clients aren’t identified in the complaint), though they’re unlikely to be the last. A press release announcing the complaint filing also contained an invitation for other participants in that plan to join the suit.
The complaint charges that Insperity failed to adequately monitor its appointee, Reliance Trust. As a consequence of this breach, the plan suffered substantial losses, through excessive fees and underperforming investments.
The complaint also alleges that Reliance Trust Co., the discretionary trustee for the plan, breached its fiduciary duties by allegedly making “imprudent” investment decisions.
An example of the fiduciary breaches alleged was a 2003 decision to hire an Insperity subsidiary — Insperity Retirement Services — as record keeper for the 401(k) plan, “rather than obtaining bids.” The complaint goes on to say claim that the defendants “failed to rebate to plan participants excessive payments (through a revenue-sharing arrangement) that exceeded a reasonable flat per participant record-keeping fee.” In so doing, the complaint alleges, the defendants acted in their own interests “at the expenses of the participants.”
The complaint cited Reliance Trust in its role as discretionary trustee for its responsibility “for selecting, retaining and monitoring of investment options.” Reliance Trust “selected and retained its own high-cost and poorly performing” investments that paid asset-based revenue sharing to the Insperity record keeping subsidiary, the complaint says.
As of Dec. 31, 2014, the Insperity 401(k) Plan had over $2 billion in total assets.
Schlichter, Bogard & Denton says that since 2006 it has filed 18 such complaints and secured nine settlements totaling more than $271.5 million on behalf of employees.
