Matrix Trust Co. Accused of Being Deceptive About Fees

Matrix Trust Co. is facing a 401(k) class action lawsuit from a Minnesota engineering firm that alleges the company took millions of dollars from retirement plan accounts.

MBA Engineering alleges Matrix Trust Co., a subsidiary of Broadridge Financial Solutions, unlawfully retained potentially hundreds of millions of dollars in 12b-1 fees, non-float cash interest and float cash interest from more than 60,0000 customers through nondisclosure and concealment.

The lawsuit states that the defendants’ key wrongdoings began when they did not disclose that customers’ assets were earning non-float and float cash interest, whether they were earning 12(b)-1 fees and by how much, and that defendants retained that money as compensation. Plaintiffs allege the company failed to disclose that it paid portions of the funds to third parties or parties of interest, and thus violated multiple fiduciary duties under the Employee Retirement Income Security Act (ERISA) and other laws.

As a fiduciary to the plan, the plaintiffs say, Matrix Trust Co. had an obligation to disclose its “right to receive fees and interest as compensation and the amount that [it] would retain on a consistent periodic basis.” By failing to disclose these funds, the defendants caused the loss of millions of dollars, the plaintiffs continue. The plaintiffs further allege the defendants knew they were keeping fees and interest generated by non-ERISA classes, yet never attempted to notify the class, and, as a result, caused harm by losing the funds and earnings that would have been generated. “Therefore, defendants are liable to the non-ERISA class for all harm that they have suffered as a result of defendants’ breaches,” the plaintiffs say.

In a statement to PLANADVISER, Matrix Trust Co. says: “Matrix Trust and its affiliates have provided technology-based solutions to the bank trust and retirement industry with the highest integrity for over 20 years. Matrix vehemently rejects these baseless and unsubstantiated allegations made by MBA Engineering. We have always acted in a manner consistent with our contractual obligations and in full compliance with the law. We will defend ourselves vigorously against the meritless charges and look forward to prevailing in this lawsuit.”

MBA Engineering filed a similar lawsuit in 2018 against Vantage Benefits Administrators Inc., contending the third-party administrator (TPA) stole $2.3 million in retirement assets from the participants in the company’s plans. Additionally, the firm alleged Vantage defendants misappropriated the plans’ assets through 35 fraudulent transfers made by Matrix to Vantage Benefits over the course of 12 months.