T. Rowe Price sued for self-dealing in its 401(k) plan

Plaintiff alleges plan participants would have paid at least $27 million less in fees if T. Rowe had selected cheaper, non-proprietary funds.

Feb 16, 2017 @ 1:49 pm

By Greg Iacurci

T. Rowe Price has been sued for self-dealing in its 401(k) plan, becoming the most recent in a growing list of financial services companies being targeted for allegedly acting out of financial self-interest in the construction of their retirement plans.

Plaintiff David G. Feinberg, a participant in the roughly $1.8 billion 401(k), claims that T. Rowe Price offered between 80 and 95 investment funds in its plan each year since 2011, all of which were in-house funds.

That provided "windfall profits" to T. Rowe and its affiliates at the expense of its employees' retirement savings, said Mr. Feinberg, who is seeking class-action status in the lawsuit, Feinberg v. T. Rowe Price Group, Inc. et al.

He also alleges T. Rowe frequently offered retail share class of its funds, as opposed to lower-cost alternatives such as an institutional share class, collective investment trust fund or separately managed accounts, and "refused to consider" non-proprietary funds.

"Defendants, rather than fulfilling their ERISA fiduciary duties, favored the economic interests of T. Rowe Price Group, Inc. and its affiliates over the interests of their employees in saving for their retirement," according to text of the lawsuit, filed Feb. 14 in Maryland district court.

In all, the plaintiff claims participants paid T. Rowe in excess of $50 million in fees during the class period. They would have paid at least $27 million less in fees, and would have saved at least $123 million more for retirement, had cheaper funds from other fund companies been used, the lawsuit says.

"We believe the suit is without merit and intend to defend vigorously," T. Rowe Price spokeswoman Katrina Clay said.

The suit follows on several similar 401(k) cases filed within the past year against financial services organizations, such as JPMorgan Chase & Co., which was sued last month.

Edward Jones, Morgan Stanley, Neuberger Berman, Franklin Templeton, American Century Investments and New York Life are among the other companies smacked with self-dealing lawsuits within the past year.

0
Comments

What do you think?

View comments

Recommended for you

Deputy editor Bob Hordt and senior columnist Bruce Kelly discuss the reasons for the marked shift of advisers between channels, including technology, the DOL fiduciary rule and the broker protocol.

Recommended Video

Channels

Latest news & opinion

SEC considers barring aggrieved investors from suing companies

Swept up by pro-business zeitgeist, regulator seeks to reverse two-decade slump in U.S. stock listings.

Wells Fargo, Morgan Stanley use contrary tactics to keep advisers

Wells is helping brokers transition to independence within the firm, while Morgan is taking them to court.

Fidelity pushes Vanguard to compete on brand in 401(k) plans

With Fidelity imposing an additional fee, Vanguard likely will look less attractive compared with comparably priced index-fund providers, advisers said.

Goldman's measure of risk appetite hits record

Global stocks and U.S. Treasuries are seeing their most "extreme" start to a year ever, bank says.

Wells Fargo erasing hurdles for advisers looking to move to its IBD

If advisers commit to staying at FiNet for a two-to-three year period, they will not have to pay Wells the fees it currently charges advisers switching channels.

X

Hi! Glad you're here and we hope you like all the great work we do here at arjuna-design. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting arjuna-design.com? It'll help us continue to serve you.

Yes, show me how to whitelist arjuna-design.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Last News

estimating retirement income financial projection calculator kickback tax vanguard international value etf social security disability widow benefits roth cash register vtthx vanguard institutional index fund review is universal life insurance worth it social security ssa 1099 legg mason capital management value trust collecting social security from ex spouse t rowe price my retirement plan treasury inflation protected securities mutual funds ids life insurance company minneapolis mn john hancock group long term care saga 3 year fixed rate bond spartan us bond index fund institutional class interest rates on cds wells fargo first trust mlp and energy income fund can capital losses offset ordinary income goldman sachs money market mutual fund vanguard bond funds etf vanguard total stock market index fund institutional shares maximum social security wage base edward jones assets under management how to set up a 401k for self employed vanguard index etf list first edition charizard holographic franklin global bond fund can you rollover an inherited ira are home equity loans deductible morgan stanley brokerage account social security rules on income