SEI Agrees to Pay $6.8 Million to Settle Self-Dealing Suit

SEI Investments Company has entered into a settlement agreement to resolve claims in an Employee Retirement Income Security Act (ERISA) self-dealing lawsuit.

According to the Settlement Agreement, the defendants will pay $6.8 million to a Qualified Settlement Fund.

In addition, SEI agrees that the following procedures shall apply to the management of its 401(k) plan on a prospective basis for a period of no less than three years beginning no later than the settlement effective date:

• Defendants shall retain the services of an unaffiliated investment consultant to provide an evaluation of the design of the plan’s investment lineup and to review the plan’s investment policy statement;
• SEI shall continue to pay all recordkeeping fees associated with the plan that it is currently paying and that would otherwise be payable from plan assets; and
• SEI shall ensure that all of the plan’s investment committee members will participate in a training session on ERISA’s fiduciary duties.

The lawsuit claims the defendants offer “only designated investment options that generate fees for SEI and its affiliates and treat the plan as a captive customer of SEI in order to prop up SEI-affiliated investment products and advance SEI’s business objectives.”

The complaint further states that SEI investment products “are not competitive in the marketplace.”

“Participants would have been better served if defendants had investigated and retained non-proprietary alternatives,” the complaint states.