The plaintiffs claimed the
defendants breached their fiduciary duties by providing as a plan
investment an imprudent money market fund that was not in the sole
interest of participants and did not provide meaningful retirement
benefits without considering a stable value fund option, and then
providing an imprudent proprietary stable value fund.
According to the court opinion,
plaintiffs allege that stable value funds are unique investments
available only to retirement plans, especially large plans, which
provide safety of principal and liquidity but far higher returns than
money market mutual funds, which are used by retail investors with
shorter investment horizons and more rapid trading activity. Cohen found
their allegations in the compliant fail to state a claim upon which
relief can be granted. “Plaintiffs challenge the mere selection of one
fund over another, with no allegations (other than hindsight financial
comparison) of why the selection was improper,” he wrote. Therefore, he
granted the Insperity defendants' and Reliance's motions to dismiss
Count IV of the complaint.
Plaintiffs alleged that defendants'
selection of funds with excessive management fees resulted in greater
income for defendants and that Reliance Trust and Insperity entities
engaged in blatant self-dealing when offering higher-cost investments to
plan participants. In order to drive revenue to Reliance Trust,
Reliance Trust selected these investments, and Insperity entities
allowed Reliance Trust proprietary investments to be offered as plan
investment options. In return. Reliance Trust selected higher-cost share
classes of the plan's funds, which paid a larger amount of asset-based
revenue sharing to Insperity entities than the available lower-cost
share classes would have paid. Cohen found plaintiffs have stated a
Finally, Cohen found plaintiffs have included sufficient
specific allegations of deficient monitoring on behalf of Holdings to
state a claim for relief.