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Compliance March 9, 2017
JP Morgan 401(k) Target of Third ERISA Challenge
All three lawsuits filed in New York district court argue
the company improperly favored its own investment options within the retirement
plan offered to workers; the firm flatly denies the underlying allegations.
Reported by John Manganaro
The 401(k) retirement plan offered to employees of JP Morgan Chase Bank is now the target of a third Employee Retirement Income Security Act (ERISA) lawsuit.
This challenge has also been filed in the U.S. District Court for the Southern District of New York, and argues like the first two lawsuits that the firm loaded the investment menu of the retirement plan with its own proprietary products and those of its business partner, BlackRock—to promote the financial interest of both entities rather than that of the plan participants.
The text of the suit offers a detailed look at the investment menu offered to JP Morgan employees, as well as the way fees for the plan have been assessed during recent years. Plaintiffs assert that various conflicts of interest were permitted to exist within the plan ecosystem, and that the plan’s fiduciaries breached their fiduciary duties of loyalty and prudence by continuing to select and retain “unduly expensive core funds and target-date funds.”
Plaintiffs argue that, “in selecting and maintaining investment options that generated significant revenue for JPMorgan Chase or its affiliates or BlackRock, the [plan fiduciaries] acted in transactions involving the plan on behalf of a party (or represent a party) whose interests are adverse to the interests of the plan or the interests of its participants or beneficiaries.” Accordingly, the plaintiffs allege that the plan officials’ “imprudent, disloyal, self-interested and otherwise conflicted decisions” violated ERISA’s prohibited transaction provisions.
The full text of the lawsuit is available here.