Compliance July 14, 2021

Confidential Settlement Reached in Excessive Fee Suit Against Voya

A previous court decision left only one claim in the lawsuit, which was related to fee disclosures.

Reported by


A lawsuit against Voya Financial and Voya Retirement Insurance and Annuity Co. has been dismissed because the parties have reached a confidential settlement resolving all claims.

The lawsuit had alleged that asset-based fees led to a 19-participant retirement plan paying $1,819 per participant for recordkeeping services.

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The Cornerstone Pediatric Profit Sharing Plan retained Voya to provide administrative and recordkeeping services to the plan pursuant to a group annuity contract. The plan sponsor also used Voya to prepare and deliver Rule 404a-5 participant fee disclosures.

Last year, Judge Colm F. Connolly of the U.S. District Court for the District of Delaware dismissed all but one claim in the lawsuit. He found that Voya was not a fiduciary with respect to the fees charged because it does not control the named fiduciary’s negotiation and approval of those terms. He noted that the fees Voya charges the plan and its participants were set in the contract, and at the time the fee schedules were proposed, Voya had no relationship with the plan or its participants and could not have been a fiduciary.

The only charge that survived regarded Voya providing “false and misleading” participant fee disclosures.

The lawsuit was dismissed with prejudice, meaning the plaintiff cannot file another suit on the same grounds.

Compliance July 14, 2021

Koch Industries Agrees to $4 Million Settlement of ERISA Excessive Fee Suit

The settlement includes a stipulation to perform a recordkeeper RFP.

Reported by


Koch Industries has agreed to pay $4 million to settle a lawsuit alleging the company, Koch Business Solutions and the Koch Benefits Administrative Committee allowed excessive recordkeeping fees to be charged to participants in Koch-affiliated defined contribution (DC) retirement plans.

In addition to the monetary relief, the terms of the proposed settlement, which still need court approval, provide that the defendants will issue a request for proposals (RFP) for recordkeeping services for the plans within 180 days of the settlement effective date.

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The original complaint noted that Alight has been the recordkeeper for the plans since 2009. It said the plan assets were all held in one master trust, and the size of the trust gave Koch “significant leverage to negotiate recordkeeping expenses.”

The complaint pointed out that, in addition to acting as the recordkeeper for the DC plans, Alight has also administered the Koch Industries Employees’ Pension Plan since 2009 and administers Koch Industries’ online benefits portal through which all employee benefits are managed. The plaintiffs suggested the firm’s fiduciary failures were either from lack of a prudent process or from interest in getting discounts from the recordkeeper on other services.

In the memorandum in support of a motion to approve the settlement, the plaintiffs’ attorneys say that although the plaintiffs still have confidence in their claims, the settlement eliminates the risk and cost of a lengthy legal process.

“At the time the parties reached a settlement, the defendants’ motion to dismiss was pending. In the event the motion was denied, there was a risk that the court might have dismissed the claims on summary judgment, as it did in another recent case,” the memo states. “Assuming the case proceeded to trial, the defendants still might have prevailed.”

The attorneys note that Employee Retirement Income Security Act (ERISA) cases often lead to lengthy litigation. “There is little doubt that continuing the litigation would have resulted in complex and costly proceedings, which would have significantly delayed relief to class members even if the plaintiffs ultimately prevailed,” the memorandum says.

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